Strong Chinese sales boost handbag maker Hermes in first quarter

Thriving demand in China boosted first-quarter sales at Birkin bag maker Hermes, underscoring an upbeat start to the year for some of the luxury sector’s biggest names.

From fashion labels to jewelers, many players in the industry have reported better-than-expected sales at the start of the year, with strong demand from Asian and US shoppers.

Hermes, known for its $10,000-plus handstitched Birkin and Kelly bags, said revenue rose 11 percent on a constant currency-basis from a year earlier, more than analysts had forecast.

Europe-based luxury companies are grappling with a stronger euro, which penalizes revenues converted back into the currency and can put off foreign shoppers in the region.

Sales in China have proved resilient, though, and Hermes said revenue in Asia, excluding Japan, rose 16 percent on a constant currency-basis in the first quarter.

The firm opened a three-story flagship store in Hong Kong in January.

Like LVMH-owned Louis Vuitton, Hermes, which trades off its “Made in France” appeal, is opening new handbag workshops to keep up with demand, as well as expanding online sales.

Hermes, which derives the biggest chunk of earnings from leather goods, posted particularly strong growth in other divisions including in its fashion lines, perfumes and jewelry business.