Good news for Hermès. And good news for its customers. The heritage brand reported financial results for the first half of 2022, as well as Q2, and they were especially strong.
Revenues rose 29% at current rates (23% at constant rates) as compared to the first half of 2021. Profitability was up 1.5% to 42.1%. Sales in the second quarter also were up. And, although the larger successes were in France, Europe, and America, China was less of a drag than expected. All in all, Hermès is hitting the mark and then some even as it remains hard for many to obtain its uber-popular Birkins and Kellys.
Image credit: https://assets-finance.hermes.com
Now for the good shopping news. According to wwd.com, CEO Axel Dumas says price increases will remain in the 3.5-4% range. He cited an upcoming 4% hike for jewelry and watches due to cost increases of gold and other metals. In what may appear a swipe at Chanel, he claims Hermès luxury standing doesn’t rely on price hikes:
“I believe that our products are so incredible and incredibly made that we don’t need to have a luxury image by increasing without ground on our products pricing even if we can,” he said. “We will be able to pass [on] the inflationary pressure in 2023 because we have, I think, always been consistent and coherent in this pricing policy.”
Dumas also addressed a couple of issues often the subject of speculation. In particular, regarding the lack of goods, he denied that it was a conspiracy or strategy. Rather, he pointed to bottlenecks, as well as a “labor and supply chain squeeze.”
Image Credit: Philippe Lopez,AFP, Getty Images
Furthermore, Dumas reiterated that Hermès does not support the reseller market.
“It’s a pity and this not something that is encouraged by Hermès, and this is in fact something that we don’t approve of,” Dumas said. “It obliges real customers to buy products that are much more costly in other situations and sometimes mixed with counterfeited products, and this is something that we don’t do and don’t at all support knowing that there is a certain hypocrisy in the second-hand market when its products are almost new.”
Read: Hermès Shows Double-Digit Growth Driven by U.S, Europe
There’s no question that demand for Hermès products in all categories remains strong. Often it seems demand far outstrips supply particularly when it comes to Hermès’ largest division, Leather Goods and Saddlery, home to its famed handbags. Revenues there rose 12% over the same period in 2021. Interestingly, and perhaps unsurprising to the many unable to obtain a bag, Leather Goods and Saddlery accounted for 43% of Hermès’s revenues for this period in 2022, lower than the 47% in 2021. Hermès cannot sell what it doesn’t produce.
However, the largest revenue change was in a small but growing area, watches, which soared 55%. Ready-to-wear, the second largest business category, spiked 36%. The “Other” line, which includes home goods, rose 33%.
Image Credit: Frank Oudeman, Hermès
Geographically speaking, Asia (not including Japan) still accounted for nearly half (49%) of Hermès revenues, down from 51% last year. Given the health restrictions in China particularly since March 2022, Hermès terms the 15% increase in revenues “good resilience.”
Revenues in France, Europe, and the Americas rose 41%, 34%, and 34%, respectively (at current rates). Certainly, the Americans traveling and shopping abroad bolstered these numbers in France and Europe. Regarding the Americas, Hermès also points to its success in recent store openings in smaller cities suburbs like Austin, Texas and the Metropolitan Detroit area.
Image Credit: @FlippingInStyle
By all indications from Hermès and LVMH the global market for luxury goods, particularly handbags, remains strong. The doom and gloom predicted for retail apparently has not hit the high end brands or its devoted consumers. At least not yet.
Tell us, has your luxury shopping changes with the economic times?
Read the Hermès 2022 Half Year financial report here.
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