Hermes emerges as the outlier with strong China sales, while the rest of luxury bleeds from the lack of shoppers

Sales at constant exchange rates jumped 17% to €3.8 billion ($4.1 billion) in the first quarter, Hermes International SCA said Thursday. This was more than analysts expected.

The shares rose as much as 1.3% in Paris before reversing those gains as investors saw signs that Hermes might not be immune to the slowdown seen by rivals. The stock is still up by more than a fifth this year, beating LVMH Moet Hennessy Louis Vuitton SE and Gucci owner Kering SA.

Hermes typically caters to the most affluent customers which makes it more resilient in a challenging luxury goods market. Its fortunes contrast with the challenges at Kering, which is seeking to turn around its biggest brand Gucci — efforts that are taking time to bear fruit.

Hermes’ revenue in its key Asia Pacific market, excluding Japan, jumped 14% to €1.92 billion in the period, while its crucial leather goods and saddlery division grew by 20%, both better than estimates.

Hermes saw softer traffic in Greater China in March after the Chinese New Year with a “slight erosion” of customers buying more affordable products such as its silk scarves. But that was compensated by shoppers splurging on its more expensive leather, ready-to-wear and jewelry goods, Chief Financial Officer Eric du Halgouet told reporters on a call.

Hermes’ perfume and beauty and silk divisions grew by 4.3% and 7.9% respectively during the quarter.

The slowdown in sales of more affordable products, such as perfumes, is being taken by some investors as a sign that Hermes may yet suffer from pressure on the middle-income consumer globally, Morgan Stanley analyst Edouard Aubin wrote in a note.