While sales slowed in China, report shows tourists to Japan saves Hermes second quarter.

French luxury brand, Hermes revenue of USD $1.3 billion or 1.2 billion for its second quarter. This was up 9.7% from the year before, which exceeded expectations. Analysts had predicted only a 8.5-9% rise in quarterly sales due to the weaker euro and a slowing Chinese economy. It was a unique shift that helped Japan saves Hermes from an expected quarter.

It seems that Hong Kong’s lose in Japan’s win. At least, in the world of Hermès. The brand’s sales soared 27% in Japan as wealthy Chinese tourists headed there to shop. Hermes has outlets in 17 Japanese cities and it didn’t yet raise prices enough in Japan to offset the weaker yen. Chinese shoppers caught on and reaped the benefits as they turned away from shopping in their home country. So, it is expected that profit margins will begin to narrow.

According to Bloomberg Business,

Sales in non-Japan Asia gained 6 percent in the second quarter, just shy of expectations and slowing from the previous quarter’s 7.7 percent increase, excluding currency swings. Luxury demand is slowing in China as the economy cools and government clamps down on graft and lavish spending.

hermes cavale saddle showjumping

The Hermes Cavale saddle.

Watches made a comeback after five consecutive quarters of decline. However, leather-goods and saddlery was the best performing, seeing a 15% rise.