Hermès's revenue grew 4.3% in the third quarter, yet the share price fell by up to 8%

French luxury goods maker Hermès reported revenue growth in the third quarter, driven by strong demand for leather goods in the United States, Europe and Japan. At the same time, the company posted weaker results in the Middle East market and in the watches and ready-to-wear categories.

In the three-month period ending September 30, the company's revenue grew 4.3% year-on-year, excluding the effect of currency fluctuations. The figure fell short of analysts' forecast of 5.2%. Following the publication of the financial report, Hermès shares fell by up to 8%, reaching a four-month low. RBC analysts gave a mixed assessment of the results.

Leather goods remain the main growth driver

Revenue from Hermès's largest business line, leather goods and saddlery, grew 12.4% in the third quarter, reaching €1.912 billion.

According to the company, demand from customers remains strong for both new models and the brand's iconic products. Hermès is simultaneously continuing to expand its production capacity.

America and Europe drive growth

By region, the strongest results were recorded in the American market, where sales grew 10.7%. The company noted growth across all countries and main product categories. Results were also boosted by the opening of new stores in Chicago, New York and Rio de Janeiro.

Excluding France, sales in Europe grew 8.6%. Growth was supported by markets in Southern Europe and the new flagship store opened in London in June.

In Japan, sales grew 3.4%, driven by activity among local loyal customers. Excluding Japan, growth in the Asia-Pacific region stood at 3.8%. According to the company's assessment, results in South Korea were solid, while in Greater China sales remained stable over the past nine months despite a challenging market environment.

Middle East and market challenges

Hermès's sales in the Middle East fell by 2.8%. The company attributed this result to the difficult geopolitical environment in the region.

Although strong demand for leather goods is driving overall growth, varying results across different regions and product categories remain a source of uncertainty for investors.

According to Hermès Executive Chairman Axel Dumas, despite the challenging environment, the company continues to achieve profitable growth.

The results show that demand for Hermès's premium products remains resilient, although the pace of revenue growth came in below analysts' expectations. Going forward, it will be important for the company to sustain sales growth and balance regional weaknesses, particularly as investors closely assess the future outlook for the luxury goods sector.