by Maura Carlin, Editor
It’s good to be Hermès . . . as the reported slowdown in the luxury goods market seems to have minimal impact (so far). With “robust sales,” not only are Birkins and Kellys (and other leather goods) selling, but so are virtually everything else on the orange shelves, except for watches.
Hermès’ revenue in the first half of 2024 (H1) was €7.5 billion, up 15% at constant exchange rates (12% at current exchange rates) compared to H1 2023. As a reminder, H1 2023 revenues rose a whopping 22% over 2022. In other words, the current results reflect year-over-year success despite a very high comparison rate. Q2 revenues also up 13% over 2023, reflecting growth similar to 2024 Q1 and 2023 Q4.
Earlier this week, LVMH reported more disappointing revenues for the period – with results dragged in part by the Wine & Spirits industry. The mega-luxury conglomerate revenues declined 1% over H1 2023 and profits dropped 14%.
Read:
Hermès Q1 2024 Revenues Jump Again
Hermès Revenues Rise 22% in First Half of 2023 With No Decline in United States
Acknowledging the complex and challenging economic and geopolitical situation, Axel Dumas, Executive Chairman of Hermès said:
“The solid first-half results . . . reflect the strength of Hermès’ model. The group is confident in the future and is continuing to invest, to pursue its vertical integration projects and to creat new jobs, while remaining true to its values.”
Geographically, according to Hermès, all regions posted “solid growth” with weakness showing in China (known as Asia-Pacific not including Japan) due to “an inflection in traffic in Greater China.” As compared to H1 2023 (a very high comparison level), revenue in China rose 9.9% at constant exchange rates (6.8% at published rate), and 5.5% (4.4% at published rate) in Q2. Interestingly, China’s share of company revenues was 46%, down from 49% in H1 2023.
Revenues in Japan in H1 were up 22.4% at constant exchange rates. Revenue rose by double digits in the other areas as well: France +14.7%, Europe (excluding France) +17.7%, and the Americas +12.6%.
As for the different business lines, everything is selling except for watches. Hermès’ largest and most popular group, home of Birkins and Kellys – Leather Goods and Saddlery – posted a “remarkable performance” with 19% revenue growth. Highlights included new designs like the Della Cavalleria Élan and the Kelly Mini clouté, as well as the R.M.S. Cargo suitcase and weekend bags.
Hermès points to its increase in production capacity along with “particularly sustained demand.” Perhaps, despite what it may seem to those clients trying unsuccessfully to purchase the coveted handbags, more leather goods are helping sales. The data suggests that this semester sales in this group accounted for 43% of the revenues, whereas in 2023, it was only 29%.
Image courtesy: @pursebop
Image courtesy: @rattilovesseoul
Results for the Other Hermès sectors line suggest that clients continue to decorate a là Hermès, whether on their person or in their homes. This group, which includes fine Jewellery and home products, showed revenue growth of 18.7% for H1 and 13% for Q2.
The second largest group – Ready-to-wear and Accessories – demonstrated revenue growth of 15.5% in H1 and 15.1% in Q2. Perfume and Beauty revenues increased 4.9% in H1 (5.6% in Q2) – and for those interested, a new woman’s fragrance is coming.
The watch business line did experience a slowdown, as did the watch industry generally in this period. Dumas noted that jewellery did well, while watches did not, though he expressed confidence that Hermès will a trend, and hope for improvement.
As for what’s coming up, Hermès points to the development of four more leather production facilities in France. Riom (Puy-de-Dôme) will be inaugurated in September 2024. L’Isle-d’Espagnac (Charente) is scheduled for 2025, Loupes (Gironde) for 2026, and Charleville-Mézières (Ardennes) for 2027. Whether this means we our favorite bags will be readily available remains to be seen, but if history is any guide, probably not.
Hermès continued its guidance 15-16% growth for the remainder of 2024, notwithstanding the pessimism written lately about the luxury industry. Dumas reflected that in a tough time, there is a flight to quality, from which Hermès benefits.
Has economic uncertainty affected your Hermès shopping? Let us know.
Love, PurseBop
XO
Updated: July 25th, 2024
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