Hermès has released its first quarter earnings, and while the luxury company reports steady sales growth across the board, it's the brand's Japanese sales that have seen the highest jump.
Sales in Japan were up by 22 percent for the first quarter of the year, ending March 31. It's a huge jump from the same period of sales in 2013, when Hermès saw just a 7 percent sales increase in the country. Overall, Hermes's sales increased 10.1 percent in the first quarter of the year to €943.5 million (about $1.3 billion).
A consumption tax hike in Japan, which took effect April 1, was the catalyst for the sales spike in the country. On that date, sales tax increased from 5 percent to 8 percent.
Other companies including Takashimaya, the country's third-largest department store, reported a surge in demand for luxury goods, such as watches and jewelry, that was higher than anticipated.
Those increases are already dropping drastically. Takashimaya has reported a 25 percent drop in sales since the tax hike went into effect that it expects will continue through the summer. It will be interesting to see whether Hermès sees a parallel drop.
Non-luxury brands, such as Uniqlo, have not seen any major changes in sales either before or after the tax change. The last time sales taxes went up in Japan, in 1997, the country went into a recession; there is a proposal for a sales tax increase to 10 percent for 2015.