It looks like luxury sales are bouncing back in China, with yet another big brand seeing a boost in the world’s second-largest economy.
Hermes said its first quarter consolidated revenue grew 11.2 percent at constant exchange rates to 1.35 billion euros, led by a “positive trend in continental China and improvements in the context in Hong Kong and Macao.” Asia sales, excluding Japan, led the way with a spike of 16 percent, followed by a 14 percent increase in U.S. sales.
It’s the latest sign that the luxury retail sector is recovering in China as consumers re-open their wallets. Industry revenues had taken a hit from slower economic growth, and as the Chinese government led a widespread anti-corruption crackdown. The campaign hurt everything from liquor sales to casino gaming revenues as officials pulled back from lavish, conspicuous spending.
Expensive luxury brands, like many other consumer firms, have been eager to grab a stronger foothold in China, the world’s largest consumer market. In 2016, total luxury retail sales hit an estimated 1.08 trillion euros, according to consultancy Bain and Company. As the economy grew, so did the spending power of the Chinese. And companies have been jockeying for more of those consumer dollars to drive sales growth.
Last week, U.K. fashion house Burberry also reported stronger sales as China demand picked up. Total comparable sales were up 3 percent to 1.27 billion euros, for the six months ended in March.
One of the earlier signs that retail and entertainment were starting to bounce back in China came as Macau’s gross gaming revenue improved — it was up 18 percent in March.
Hermes shares in Paris rose 1.4 percent yesterday.