Image courtesy: Hermès
Hermès does it again, bucking the doom and gloom reported by much of the luxury sector, which likely comes as no surprise to anyone trying to purchase the brand’s coveted Birkins and Kellys.
Describing the results as “solid growth” for 2024 Q3 and first nine-month results, Hermès reported revenue of €11.2 billion at the end of September 2024. This represents an increase of 14% at constant exchange rates (11% at current exchange rates) compared to the same period in 2023. For Q3, revenue rose 11% at constant exchange rates, slower than the 2023 Q3 numbers due to what Hermès calls a high 2023 Q3 comparison in Asia.
Axel Dumas, Executive Chairman of Hermès, stated:
“In a more uncertain economic and geopolitical context, I want to thank all employees for the robust third-quarter performance, and our customers for their loyalty. Thanks to the singularity of its model, Hermès is continuing its recruitments and long-term investments.”
Going deeper into Hermès numbers geographically, Hermès’ largest market, China (called Asia excluding Japan) posted 7% growth from January through September 2024. Q3 did show a slowdown, with 1% revenue growth. Hermès attributed this to a downturn in foot traffic and the high comparison period. For reference, in the first nine months of 2023, revenues in China increased 21%.
In the first nine months of 2024, sales in Japan continued strong growth rising 23%. Revenues in Europe (excluding France) are up 18%. The Americas showed “solid momentum” with a 13% rise. And France, which experienced a “slight slowdown” in-store traffic due to the summer Olympic games, showed revenue growth of 14%.
This revenue growth appears to outpace what many luxury sector companies are experiencing. Hermès has beat expectations of some analysts, like Deborah Aitkin at Bloomberg Intelligence who thought 10.5% growth was optimistic for Q3. Yet, Hermès’ Q3 growth is slower than that reported in several years.
As for the Hermès métiers, all reported solid sales, except watches. The largest business line – Leather Goods and Saddlery – posted 17% revenue growth this year and 14% in Q3. No doubt much of this is driven by the sustained demand for both the Birkin and Kelly. Again, contrast this to the LMVH Fashion & Leather Goods group, which experienced -5% growth in 2024 Q3.
Other Hermès leather highlights include the introduction of new designs like the Constance Élan and Bolide à dos. To meet the ever-growing demand, Hermès opened its twenty-third leather goods workshop in France, with more facilities in the works.
Also reporting 17% revenue growth is Hermès’ “Other Hermès Sectors,” which includes homewares and jewelry. It appears that decorating Chez Hermès is a trend yet to subside.
The Ready-to-wear and accessories group, now Hermès’ second-largest division, displayed 15% revenue growth. Perfume and Beauty revenues rose 7%, and Silk and Textiles grew 2%.
As Dumas has said before (paraphrased here), in an economic downturn there tends to be a consumer flight to quality, from which Hermès benefits. Seen by many as the pinnacle of luxury, particularly in its handbags, there seems to be no decline in demand for these products, heightened by the difficulty in getting them.
On the other hand, Hermès faces some challenges, including a California Antitrust lawsuit. In that case, three plaintiffs allege that the brand “requires” potential customers to purchase products other than handbags to access Birkins and Kellys.
Whatever the legal merits (or lack thereof), there is a rumbling among shoppers complaining about their perceived need to purchase items they may not truly want to build a customer profile. Some report an increase in Hermès goods on the secondary market, as well as a decline in resale pricing of the hard-to-get bags.
Additionally, could the continued difficulty of purchasing turn off would-be buyers, frustrated and wondering if it is worth it? As handbag prices rise, is there a level that is too high to justify? Time will tell as we watch . . . and wait to hear that our Birkin has arrived.
Read related articles:
Which Two New Hermès Bags Attributed to the 15% Growth in 2024?
Updated: October 24th, 2024
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