(Bloomberg) -- Hermès sales jumped in the second quarter as the Birkin bag maker weathered the luxury demand slowdown better than peers, thanks to its reliance on the wealthiest clients.
Revenue at constant exchange rates rose 13.3%, Hermès International SCA said Thursday, above analysts’ expectations. First-half recurring operating income amounted to €3.15 billion ($3.42 billion) slightly lower than estimates. All regions grew by double digits except for the area that includes China.
Hermès’ shares rose as much as 2.4% in early Paris trading, bringing the gain this year to about 8%.
The company’s results tend to be less volatile than other luxury houses because it enjoys strong pricing power and long wait-lists for its most coveted products, such as its Kelly and Birkin handbags, which start at about $10,000.
Speaking to reporters, Executive Chairman Axel Dumas said Hermès isn’t seeing a change in trends so far this quarter.
“Hermès managed to deliver a resilient performance in our view and shared encouraging comments on current trading,” Barclays analyst Carole Madjo said in a note.
The company is experiencing softer demand for its more affordable goods such as silk scarves, reflecting a curb in spending by aspirational customers, Dumas explained. But Hermès’ two biggest units, leather goods and saddlery and ready-to-wear and accessories, saw double-digit growth rates.
Dumas also said the Olympic Games — which officially kick off with an opening ceremony in Paris Friday evening — typically don’t favor business in host cities. He’s hoping the French Riviera will compensate for a loss of traffic in its Parisian stores this quarter.
Hermès results follow disappointing performances at LVMH Moët Hennessy Louis Vuitton SE, the owner of Christian Dior and Tiffany & Co., and Kering SA, which is going through a challenging turnaround at Gucci, its biggest label.
Overall, the results this week suggest that wealthy consumers have been reining in spending across much of the globe, with the exception of Japan, where overseas travelers from China and elsewhere are taking advantage of the weak yen to snap up high-end goods.
Although Japan performed well for Hermès in the last quarter, Dumas explained it was mostly led by local customers.
(Updates with shares in third paragraph, analyst comment in sixth)
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