UPDATE 2-Hermes beats sales expectations, sees positive signs in China

‌Hermes, whose ​handbags sell for $10,000 and more, on Thursday reported stronger than expected fourth-quarter revenue growth, lifted by strong sales in the United States and Japan. Thanks to its ultra-wealthy clients and large order backlog, the ‌group has weathered a luxury sector slowdown better than most of its rivals, consistently increasing revenue while sales at other luxury groups, like LVMH and Kering , have been under pressure.

"The group is going into 2026 with confidence," said CEO Axel Dumas, adding that this year's price increases ‌would be around 5-6%, down from a 6-7% rate in 2025, attributing the slower pace to currency shifts. Hermes shares gained 2% in ‌early trade.

Chiara Battistini, luxury equity analyst at J.P. Morgan, said the price increases Hermes imposes on its deep-pocketed customers this year will be key for the company's growth outlook. Many of its rivals have put the brakes on price rises due to falling sales. Gucci owner Kering's CEO earlier this week said a price hike "bonanza" post-pandemic had contributed ⁠to the company's ​revenue slide.

Sales of products, including ⁠Birkin and Kelly bags, silk scarves and perfume, grew by 9.8% in the fourth quarter in currency-adjusted terms, compared to an analyst consensus compiled by Visible Alpha of 8.4% ⁠growth. Sales in the Americas region, mainly the United States, rose by 12.1%, beating expectations of around 9%, while sales in Asia excluding Japan - a region ​mainly driven by China - grew 8%.

POSITIVE SIGNS IN CHINA In a call with analysts, Dumas said he was seeing positive signs ⁠in China, a major luxury market that has slowed significantly in the past few years due to the impact of a property crash on the country's economy.

"I do not ⁠see ​the situation deteriorating," he said. "There are positive moves, in particular the way they are managing the property crisis." Revenues in Hermes' leather division, which accounts for most of its profits, grew by 14.6% organically.

Hermes' full-year operating profit came in at 6.57 billion euros ($7.79 billion), with a ⁠41% profit margin, slightly ahead of estimates of a 40% margin. The company said it would pay a dividend of 18 euros per ⁠share. Hermes has grown its overall ⁠annual sales by around 38% in the past three years even as most of the luxury industry stalled. Its shares are up 36% over the same period.

With just 25,000 staff globally, family-controlled Hermes has ‌become France's second-largest company ‌by market capitalisation after rival LVMH.