Hermès, the luxury fashion house on Friday reported above estimate sales, showing there is still a demand for exclusivity in an otherwise sluggish luxury market. This is especially true for Asian market as it account to almost half of Hermès revenue. Hermes, the maker of Birkin bag reported higher sales for Q4 of 2024.
There was also an increased demand for luxury good in U.S., adding to signs of a rebound in demand for exclusive goods.
Hermès revenue
Hermès, the French luxury group reported revenue of 3.96 billion euros ($4.15 billion) for the Q4 of 2024, , outpacing the 3.69 billion euros forecast by LSEG analysts. It was up nearly 18% as compared to 2023. Full-year sales at Hermès hiked by an annual 14.7% at constant exchange rates to 15.2 billion euros versus an anticipated 14.94 billion euros.
Hermès increased profit
In a market where most of the luxury sector experienced slow down with rising cost and lack of innovation, Hermès has remained resilient, upholding its exclusivity and appeal.
As per Axel Dumas, Executive Chairman at Hermès it’s the loyalty of customers that has kept the sales growing in a otherwise volatile macroeconomic environment. He stated, “In 2024, in a more uncertain economic and geopolitical context, the solid performance of the results attests to the strength of the Hermès model and the agility of the house’s teams, whom I thank warmly”.
Hermès forecast
As per Hermès, its forecast continues to be revenue growth, though no specific numbers were presented. Dumas said, that it was moving into the year “with confidence.” He add, that it was “too early to see an inflection” point in the wider industry.
Sales growth was broad-based across all regions, with Asia-Pacific excluding Japan recording what the company dubbed a “remarkable” 9% year-on-year increase in the fourth quarter despite wider weakness in the key Chinese luxury market.
Hermes’ leather goods and saddlery segment, which accounts for just under half of group revenues, grew at the fastest pace in the Q4, up 21.7%.
Hermès stock update
Company shares were up 4% during the day before paring gains to close 0.8% higher. While LVMH and Gucci owner Kering also were up more than 1.5%.
The bottom line for Hermes shareholders last year was a profit of 4.6 billion euros, around 7% more than in 2023. Hermes proposed a dividend of 16 euros per share.
Luxury market weak demand
LVMH (Louis Vuitton Moët Hennessy) and the Gucci Group Kering recently struggled with weak demand for their products.
Higher demand than supply
As per the analysts the demand for Hermès product is higher than supply, enabling it to raise prices whenever needed. In light of the potential implementation of U.S. tariffs on European goods, the French group will be one of the handful of companies to have more room to maneuver and pass on import duties onto consumers through price hikes if needed, analysts said.
