Hermes does well in China

Hermes reported a 17% increase in first-quarter sales last week, maintaining its rapid growth momentum from the previous quarter, particularly in China, and highlighting the strong demand for high-end luxury goods.

This growth surpassed expectations and outpaced larger rival LVMH, underscoring the resilience of businesses operating in the top end of the market.

Sales reached EUR 3.81 billion ($4.08 billion) for the first quarter, surpassing expectations. Initially, shares in Paris rose by as much as 1.3%, but later retraced those gains. They are still up more than 18% since the beginning of the year.

In the key Asia Pacific market, excluding Japan, Hermes saw a substantial 14% surge in revenue to EUR 1.92 billion during the period. Additionally, its leather goods and saddlery division experienced a remarkable 20% growth.

The luxury sector, particularly Hermes, stands out to me as an investment opportunity. Hermes boasts profit margins that rival those of tech giants, with minimal competition in the ultra-high-end luxury handbag market. Their mastery lies in the ability to maintain exclusivity and scarcity of iconic items like the Birkin and Kelly bags.