The Asian Giant's Slowdown

The luxury sector has been hit hard by retrenching consumers in China, which for years served as the primary growth engine for the entire industry.

Although Hermès International SCA reported second-quarter sales growth in line with market expectations, the lack of acceleration in China sounded alarm bells among analysts.

Axel Dumas emphasized that the Chinese market is "not out of the woods yet." This has led him to closely monitor not only the country's ongoing real estate crisis, but also the price dynamics of pork.

Meat Market Offers Little Comfort

For now, these indicators offer little solace to the fashion house chief:

• Wholesale pork prices in China dropped to a 16-year low last month.

• Delayed recovery: Despite efforts by the Chinese government to curb production and stabilize the market, a rebound in prices is likely to be a prolonged process.

Stock Plunge and Reliance on China

Sales of Hermès' famed leather goods fell short of investor expectations, amplifying fears regarding the brand's high reliance on the weakening Chinese market.

Against this backdrop, Hermès shares plummeted nearly 11.5% on Wednesday, sinking to their lowest level since January 2023.

Hermès has proven significantly more vulnerable to China's economic headwinds than its primary rivals. With the region encompassing China accounting for nearly half of the French brand's total revenue, premium handbag sales will likely remain under pressure until Chinese consumers start booking lavish banquets once again.