Ladies and gentlemen, welcome to the Q3 analyst conference for Hermès International. I now yield the floor to Eric du Halgouët, CFO, and Antoine Riou, Head of Investor Relations. Gentlemen, over to you.
Thank you very much. Good morning, one and all. Thank you very much for joining us. In the third quarter, sales continued to grow and reached EUR 3.9 billion, up 10% at a constant exchange rate, a slight improvement compared to Q2, particularly in Europe, the Americas, and Asia. Hermès kept the course, thanks to solid growth in spite of a high comparison basis. Indeed, Q3 sales last year were slightly above that of Q2. The group's consolidated revenue amounted to EUR 11.9 billion at the end of September 2025, up 9% at constant exchange rates and 6% at current exchange rates. Currency fluctuations represented a negative impact of EUR 254 million on revenue.
At the end of September 2025, the leather goods and salaries and the other Hermès sectors achieved solid growth. The ready-to-wear, accessories, and silk and textile sectors accelerated in Q3. Hermès is maintaining its course thanks to solid growth, thanks to our investments, and thanks to our creation of jobs to support our growth. For 2025, our outlook remains unchanged. The group confirms its ambitious growth target for revenue at a constant exchange rate and continues to grow with confidence. Over to Antoine for the geographical and métier breakdown.
Good morning, one and all. Moving to the geographical breakdown and the evolutions will be given at a constant exchange rate. As Eric mentioned, at the end of September 2025, all the regions posted growth. First of all, Asia, excluding Japan, is at + 4%.
With strong growth in Greater China in the third quarter, the region benefited from the House's value strategy, the loyalty of local clients, and the qualitative development of the network. The renovated and expanded store at the Central Embassy Mall in Bangkok reopened in January, followed by the Taichung store in Taiwan at the end of March and June. The renovated and expanded Four Seasons store in Macau reopened its doors, followed by the Galleria Mall store in Seoul in August. Japan, + 15% after a solid Q3, maintained sustained growth driven by the loyalty of local clients. The Americas, + 13%. Still a strong momentum with a slight acceleration in Q3, thanks to the U.S. The new Scottsdale store in Arizona opened in September, and then we had Nashville in Tennessee last week. In Mexico, the Molier store reopened in early October after renovation and expansion work.
Europe, bar France, is at +12%, so solid growth there in all the countries of the region. France, +9%, with still strong activity in all the stores. In Italy, the Florence store reopened in February after renovation and expansion work. The other area, +15%, which mainly includes the Middle East, pursues its momentum. Moving on now to the métiers or the division breakdown at a constant exchange rate. Leather goods and saddlery post great performance with +13% in line with its annual trajectory, supported by strong demand for iconic products and new collections. The new Equestrian-inspired models, Tablier Sellier and [Bécasse] Trotting, as well as the return of the iconic Plume, are enjoying great success. The increase in production capacities continues with the opening of the 24th leather goods workshop in l'Île de Bagnac in the Charente region in September.
Over the next three years, three additional leather goods workshops will open: Loop in 2026, Charleville-Mézières in 2027, and Colombeyles in 2028. They will be reinforcing the 10 centers of expertise located across the national territory. The ready-to-wear and accessories sector posts strong growth at +6%, continues on its strong momentum with a speed-up in Q3. The men's Spring-Summer 2026 show held at the Palais d'Iéna was very well received. In September, we presented the Autumn-Winter 2025 collection. The women's Spring-Summer 2026 collection was successfully unveiled in early October at the Garde Républicaine. Silk and textiles, +4%. Good growth supported by bold creations, exceptional materials, and a diversity of formats. Perfume and beauty is at -5%. It's impacted by a high comparison base due to last year's launch of Barrina. The perfume collections have enhanced with two new eau de parfum entrants this year: Terre d’Hermès and Barrina.
In a challenging environment, the watches métier continues its development with the success of the new versions of the Hermès H08 line and the reinterpretation of its iconic complication, Le Temps Suspendu. In July, Hermès also announced plans to strengthen its production capacities with the expansion of its Noirmont watchmaking site by 2028. The other Hermès sectors, so jewelry and home universe, continue to deliver strong growth at +11%. The eighth for haute bijouterie collection, Les Formes de la Couleur, were presented in July in Tokyo, and at the end of May, Hermès also announced the first stone being laid down for the new Cousé workshop dedicated to tableware. Thank you very much, and now we're happy to take your questions.
Ladies and gentlemen, you can now ask your questions by pressing the star key and then one on your phone. Please, no more than two questions at a time.
We have Charles Scotti from Kepler Cheuvreux. Over to you.
Good morning. Thank you. I've got two questions. First of all, could you give us an update on trading and an outlook on Q4 because the organic revenue has increased by EUR 350 million in line with Q2? Do you think that you can keep that pace in spite of a comparison basis which will be more complicated for Q4? Could you tell us a bit more about your confidence going forward, especially for Greater China? On the leather goods growth, it has slowed down, although it's still in keeping with annual targets. Have you built up any stocks in Q3 to support growth in Q4 where the comparison basis will be particularly tough for leather goods?
Thank you very much, Charles-Louis. As you say, Q4 will be a higher comparison basis. We're at something like $200 million more than in Q3. The trends at early October mean that we are confident in spite of this comparison basis. We're confident across all the regions. Leather goods at +13% is in keeping with our annual target. I'll also recall that our deliveries are not linear for our different stores, so it's really delivery effects. Our stocks have been rebuilt and will be at a similar level to that same time last year to prepare for the end of the year and for the Chinese New Year.
Next question from Anne-Laure Bismuth from HSBC.
Good morning. Two questions on my side. First of all, on the specifics bar Japan, we've seen a slight increase in the percentage. Is that down to China mainly? How do you explain this slight improvement when some of your peers have seen a better improvement in Q3? Is there still less footfall in the stores in China? Second question, have you completed your price increases for next year and can you tell us more on that?
Okay, so for Asia-Pacific, for South Asia, we have seen a speed-up in growth. We're looking at double-digit growth in Malaysia, Korea, Australia, and similar growth between Q3, Q4 for Singapore and Thailand. For Greater China now, I'd just like to remind you that we grew over the whole year in 2024, and there again, this year we are posting growth since the beginning of the year up until the end of September. There'll be no huge changes in that trend. We continue with our value strategy. There is a slight improvement in Q3 this year compared to Q2. There are two encouraging signs which make us optimistic from a macroeconomic point of view. First of all, there is more stability in real estate in tier-one cities in China, so that's a positive signal. Secondly, we have another reason to be optimistic.
It's the pickup of the financial markets in continental China and Hong Kong, which is also, yeah, a good sign. For the first week of October, which was the Golden Week in continental China, we saw quite strong and dynamic business. We can't extrapolate this for the whole quarter, but nonetheless, it is encouraging. Regarding now, Anne-Laure, your second question on price increases, we have our budget process which is underway, so it's too early to give you any indication on that. I can only tell you that it will be below the price increase of this year. That's the only indication I can tell you right now, but the budget is still under discussion.
Next question, Luca Solca from Bernstein.
Good morning, Eric. Good morning, Antoine. Thank you for taking my question. My question is on the demand trends for the different segments of your client base. We can see that the most affluent part of your client base is very dynamic at the moment. I was wondering if this is a trend that will continue in the future. Is it going to also drive demand in China? It seems that wealthy and affluent people are also going to be a key driver there. Could you give us a little bit more detail on the demand dynamics that you currently see in the U.S.? Is it a demand that is very broad, that encompasses the whole customer base, or is it driven by the more wealthy individuals given the cryptocurrency market trends at the moment?
First of all, for our Chinese client base, outside of Greater China, we haven't seen a speed-up, particularly for wealthy individuals. The two client bases that we believe are the most important in Europe and France are people from the U.S. and the Middle East who travel over. We saw it in Q3, a slight uptick when the events between Israel and Qatar, when the tensions were at their highest. We've gone back to normal levels since then. As you've seen, silk, which is a volume-driven division, and clothing and fashion accessories have sped up a little bit. We've seen these divisions benefit from a slightly higher footfall, including in the U.S. Luca, your second question.
We had a very good Q3 in the U.S., growth that was driven by jewelry, silk, shoes, watches, by pretty much all of the divisions, an increase in footfall, and also a growth that is well distributed between the East and the West Coast. Over and beyond the U.S., Mexico and Brazil also have sped up their growth. Also, a reminder, the U.S. is a country where we'll be focusing our development. In October, we opened a store in Nashville, Tennessee. We're going to continue to focus the development of our network in the U.S.
Thank you, Eric.
Next question, Thomas Chauvet from Citigroup Inc.
Bonjour, Eric. Bonjour, Antoine.
Good morning, Eric and Antoine. Two questions. Question number one on ready-to-wear and accessories. Grace Wales Bonner was appointed yesterday to follow up from her predecessor. A lot has been said, but is it going to mean a more modern, more casual look to the men's ready-to-wear collection? How much does the menswear weigh in the total revenue? Second question on perfume and beauty, which was at about 3% of the revenue. It's about EUR 500 million over the whole year. This is a business which is more and more strategic for other players in the luxury industry. What is the weight of makeup five years after its launch? Are you thinking about launching a new line of care products? Are you happy with the profitability of this venture into makeup? Tell us a bit more about the vertical integration for perfumes.
Regarding the appointment of Grace, it really is in keeping with our desire to continue on the momentum. I think that Grace has got a lot of things in common with Véronique Nichanian, her love of craftsmanship, for example, and her very contemporary outlook on fashion. She'll be bringing her own signature to a new chapter for men's ready-to-wear, and her first collection will be presented in January 2027. Regarding perfumes now, as you've seen, a slight decrease in Q3. In the press release, we said that it was down to the high comparison point with the launch of Barrina in Q3 and Q4 last year. There's also a new Hermès that was launched and a new chapter for Le Bain, which opened last year. Some of our distributors also had to reduce their stocks in Europe and in the U.S.
There's a deceleration between our delivery and the end sales to customers. The end sales continue to increase in France, Germany, Italy, etc. The takeaway here is that our pillars, Barrina and Terre d’Hermès, continue to grow. For your final point on care products, this is a project that we're still working on, but for 2028 onwards.
Next question from Mr. Antoine Belge from BNP Paribas Exane.
Good morning, Eric. Good morning, Antoine.
Two questions on my side. First of all, for clothing and accessories, it's a category that is, well, two-pronged categories with different dynamics. You mentioned at Q2 that some accessories, like belts, for example, were bought by tourists, and that because there was less tourism, it explained the job. Could you tell us a bit more detail on Q3 for clothes on one side and accessories on the other? Second question now on your operational margin rate for this year. Do you think that you'll be around 40% or above? Is that still achievable? You talked about the negative exchange rate on the revenue for Q3. I imagine it'll be the same for Q4. Generally, when you're impacted on the revenue in 2025, you'll be maybe also impacted going forward. If you could tell us more on that.
Then the third question, there was some controversy on the Kuchelini and on some sales in Russia. Could you maybe tell us what you do or don't do in Russia and with the Russian client base?
Now, clothes and accessories indeed cover men's ready-to-wear, women's ready-to-wear, and fashion accessories. Growth is driven by ready-to-wear for both men and women. For the rest, it's a bit more complicated for fashion accessories. It's a division that is very much about volume. Now, regarding our operational margin, I'd just like to remind you, and you've seen it over the years, the profitability in Q2 is always lower to Q1 simply because we speed up our investments during the year. This year, we've got an exchange rate impact which is quite homogeneous, but we have also made some gains on our hedging, but there's been the depreciation of euro.
We're going to speed up also our communication investments in Q2. For recruitment, we're also very conservative at the beginning of the year. We always wait for the general trend to crystallize before we can start recruiting. Recruiting will also be a bit faster from now on. That's the different elements to bear in mind, the different elements that are there to support the growth of the group. Just a final point on our IS, our information system. We invest for the future, although it's booked as an expenditure, but we are preparing for the future as well. Regarding sales in Russia, we are one of the first groups to have pulled out of Russia and closed our stores after the beginning of the war. All of our stores are closed since the war started.
We'd kept the stores, but we're now exiting the leases so that we only keep one store in Stoletikov just to host the couple of people who are in charge of legal obligations and maintenance. We have no business in Russia anymore.
Thank you. Ladies and gentlemen, you can ask your questions by dialing star one on your phone. Please keep to two questions. Next question from Édouard Aubin from Morgan Stanley.
Good morning, Eric and Antoine.
Good morning, Eric and Antoine. Two questions. For the store openings, Eric, we've seen the trends over the last two years. The total number of stores is pretty much the same or even a tiny bit lower, but with a bigger average size for the stores. In 2025 and 2026, are we going to be seeing the same trend? Could you maybe tell us an even vague idea of the percentage increase in square meters? Secondly, I imagine that for leather goods, you're looking at capacity over the next few years. In light of that, the 6%- 7% growth that you've enjoyed over the last few years in leather goods, is it going to be the same for 2026, 2027? Do you think that you keep that rhythm of + 6%, + 7% over the next two years? Thank you.
Okay, regarding the development of the network, Édouard, you've summed up very nicely the strategy of the group. We move to larger stores, stores that are generally more than 500 sq m . For 2026, we have two large projects which are going to be completed. First of all, we've got the renovation and the extension of the Geneva store, which is a temporary store at the moment. There's another big project where we'll be opening Bond Street in London. It's a very big project, and it'll be a very original store, and it'll open around the summer, a bit before. We also have a store that will be opening in China, a market that we invest quite a lot on, and in the U.S. This year and next year, we always have three to four openings of stores and about 15 projects of renovation and expansion.
Regarding leather goods capacity at + 6%, + 7%, we are going to be in line with that for next year with the opening of a new leather goods workshop, but also with the extension of some older sites that have reached maximum capacity. We keep to our rule of having sites with 300 people maximum, 250 of which are craftspeople. In 2026, we're going to continue with our capacity increase around + 6%, + 7%.
Next question from [David Demaya from CIC].
Good morning, gentlemen. A quick follow-up question on China. You mentioned a slight improvement in Q3, and I'd like to know whether that is attributable to an increase in footfall, as you highlighted for the U.S., for instance, or is it your value strategy that is paying dividends in China? It's not so much down to footfall or value strategy.
Actually, it's a little bit of both. There is a slight increase in footfall, and our value strategy is also paying dividends. Our value strategy aims at selling products of higher value. For jewelry, for example, we sell larger items. Likewise, for watches, we sell more items with complications. It is the combination of both which explains this improvement, which speaks to this good improvement in early October. You need to, of course, remain humble and conservative. There are some positive signals in China with the financial markets that are recovering, and also the real estate in tier-one cities in China, which is stabilizing.
We have no further questions for the moment, it would seem.
In that case, we'll be closing this conference. Do not hesitate if you have further questions. Thank you very much, and see you soon.
Ladies and gentlemen, the conference is now over. Thank you very much for taking part.
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