Posted on November 7, 2011

So you thought the world’s luxury market was in trouble? Think again. French luxury group Hermes raised its full-year sales forecast on Friday after third-quarter growth beat its initial target, pulled by buoyant demand for the 174-year-old brand in Europe, the Americas and Asia.

The maker of 10,000-euro leather bags and 1-million-euro ($1.4 million) crocodile leather jackets said it expected full-year sales growth at constant exchange rates to reach 15-16 percent this year, against a previous forecast of 12-14 percent.

The upgrade was expected by many analysts, and some said the new forecast was still conservative. Hermes sales rose 18.2 percent at constant exchange rates to 683.2 million euros in the three months to Sept. 30, while analysts expected growth of 17 percent.

The upbeat outlook from Hermes comes after luxury peers such as Burberry , LVMH and PPR posted forecast-beating quarterly figures and said they saw no slowdown in spite of global economic concerns.

Of course, more middle class barnds have not fared as well. Abercromvie and Fitch and The Gap which are brands more reflective of lower income consumers have produced weaker results and discouraging outlooks. In November’s LUXURYLETTER, the monthly New York luxury real estate report¬†produced by Leonard Steinberg and his team, it was the high end super-luxury properties that were reported to be seling best, even showing price escalations. Another reflection of how the world’s traditional 3 class system is drifting towards a 2 class system:¬†¬† rich and poor.