If you thought a little pandemic was going to stop folks from buying Hermès, boy were you wrong. True, in the first months of lockdown sales and revenues plummeted as stores shuttered and online shipping sputtered. But, a few months in – without any real tourist travel – Hermès is seeing improvement better than its near-peers.
The latest reported financial results for Q3 (ending September 30, 2020) demonstrate a stronger quarter in 2020 than in 2019. That’s right – amid COVID restrictions, Hermès sales in the third quarter of 2020 were nearly 7% (at constant exchange rates; 4% at published rates) better than the third quarter of 2019.
Accounting for the success… its largest division, leather goods and saddlery, showed a 7.8% hike (at constant exchange rates; 4.8% at published rates). It’s probably no shock that demand for Birkins and Kellys (and other leather goods) remains strong and likely continues to outweigh supply.
Ready-to-wear and accessories (about half the size of the leather group) revenues rose 6.8%. The top performer – perhaps unsurprisingly given all of the stay-at-home restrictions – was the “other” business group that includes home furnishings. Although it represents a much smaller share of Hermès’ business, volume increased 42.4% in Q3 2020 versus 2019.
Geographically, Asia was the star – both in the areas including and excluding Japan. To be fair, those were the first countries to shut down and also first to reopen. Nevertheless both in-store and online sales (with a new digital platform) were strong.
Let’s be clear, however, 2020 remains a challenging year for Hermès and the other luxury brands. Despite the apparent improvement in the third quarter for Hermès (and also Louis Vuitton which saw a 12% increase year over year Q3 for its fashion and leather goods division), Hermès revenues are down for the year by 14% (at constant rates). LVMH (Louis Vuitton’s parent company) is down 7% overall for third quarter comparisons. And other brands, like Gucci, have suffered much worse.
The good news for Hermès, though, is that if the stores are well stocked… customers will buy! In other words, send those Birkins and Kellys to the boutiques. Apparently, there are plenty of buyers.