Sales at Hermes, the company that makes Birkin bags, increased in the second quarter, demonstrating the strength of the market for the group’s high-end leather goods despite a gloomy economic outlook.

With double-digit growth in every region, group sales for the three months ending in June totaled 3.32 billion euros ($3.65 billion), up 27.5% at constant exchange rates and higher than the Visible Alpha consensus of a 22% gain.

Hermes’ results come at a time when luxury equities are under pressure because to scepticism about how quickly China can recover from the recent pandemic, and a months-long spending frenzy in the American market is cooling off due to rising inflation.

Shares of luxury corporations have fallen recently as a result of China’s disappointing economic data, Richemont, owner of Cartier, and LVMH’s more sober outlooks, as well as other recent news.

However, Hermes, which caters to more affluent customers with handbags like the highly sought-after $10,000+ Birkin model and is renowned for withstanding economic turmoil better than competitors, experienced robust growth across all areas.

“We’ve seen no interruption in (growth) trends,” Hermes Executive Chairman Axel Dumas told journalists.

“In difficult times there is what you call a flight to quality and we have benefited,” added Dumas.

Recurring operating income for the first half of the year was 2.96 billion, an increase of 28%, while margins increased to 44% from 42% in the same period last year.

“Strong print across the board,” said Exane BNP Paribas, citing fast sales growth and consensus-beating margins.

Analysts claimed that the outcomes demonstrated the viability of Hermes’ business strategy, which calls for meticulous management of inventory and manufacturing.

“The power of the Hermès brand is unquestionable, long waiting lists smooth out any short-term demand hiccup,” said Bernstein.

Early in the day, Hermes stock rose 3.3%, while rival Kering gained 1% and LVMH lost 0.5%.

(Adapted from marketScreener.com)