Luxury fashion house Hermes (HRMS.PA) revealed a robust 17% increase in first-quarter sales on Thursday, surpassing expectations and maintaining a rapid growth rate, particularly in China. 

Despite broader economic challenges, the stellar performance underscores the enduring demand for high-end luxury goods.

Hermes reported sales of 3.81 billion euros ($4.08 billion) for the three months ending March 31, outperforming consensus estimates for a 13% rise. The company’s resilience and consistent growth have positioned it as one of the most reliable performers in the luxury goods sector, even amidst challenging economic conditions.

While Hermes shares experienced a 2.5% decline in late morning trading as investors secured profits, analysts remain optimistic about the company’s trajectory. Thomas Chauvet, an analyst with Citi, noted that while the sales figure exceeded expectations, there was a slight miss in the smaller watches division, which posted 4% growth compared to forecasts for 11% growth.

Despite concerns over Chinese demand for luxury fashion, Hermes witnessed a 14% growth in sales in Asia, excluding Japan, with all other regions also reporting double-digit increases. 

Although there was softer traffic in China in March following the Chinese New Year holiday, Hermes’ Executive Vice-President Finance, Eric du Halgouet, emphasized that strong demand from affluent clientele offset the decline in store visits from customers seeking more affordable items.

The company’s largest segment, the leather goods division, experienced a remarkable 20% growth in the quarter, driven by the success of new models like the Constance Elan bag. Hermes also benefitted from a strategic price increase of 8% implemented this year, providing a favorable tailwind for its financial performance.

Hermes currently boasts a higher valuation than its rivals, with a 12-month forward price-to-earnings ratio based on projected earnings of 51, surpassing LVMH (LVMH.PA) at 24 and Kering (PRTP.PA) at 16. Analysts anticipate continued momentum for Hermes, buoyed by its strong brand appeal and strategic initiatives to sustain growth in the luxury market.