French luxury brand Hermès, the manufacturer of the iconic Birkin bag, is expected to report its lowest quarterly revenue growth since late 2021, Bloomberg reported Wednesday.
The Paris-based company, described as “traditionally resilient in the face of challenges weighing down its luxury peers” by the outlet, is expected to reveal its weakest numbers in the last three years when it releases sales figures on Thursday.
“Hermès’s undisputed lead in luxury shopper resilience faces its biggest test of recent quarters,” said Bloomberg Intelligence analyst Deborah Aitken.
While Hermès, established in 1837, is expected to report a 10.5 percent organic sales growth for the third quarter, Aitken said this could be “optimistic.”
The brand outperformed other luxury brands like LVMH and Burberry in the second quarter, with its loyal base of customers and valuable purses named after actress Jane Birkin, but its ability to continue to withstand industry-wide setbacks is reportedly “now being called into question.”
Aitken and UBS analyst Zuzanna Pusz both pointed at a slow-down in the Chinese market for luxury goods, evidenced by LVMH’s low third quarter sales.
According to the analysts’ estimates, Hermès’s organic growth in Asia-Pacific — excluding Japan — has most likely slowed to just 2.3 percent, down from 10.2 percent in the same quarter in the last fiscal year.
Even with the purse division carrying the brand, the silk, textiles, and watches divisions all were predicted to continue experiencing a drop in sales that were noticed in the second quarter of the year, Bloomberg reported.
“That said, the company’s performance is still expected to have been relatively solid compared to most of its rivals,” the outlet noted.
“Hermes is expected to continue outperforming its industry peers due to the enduring demand for its iconic handbags and its exclusive client base, even as volume-driven categories suffer in the current consumption environment,” Alphavalue analyst Jie Zhang told the publication.