Image courtesy @thebirkinfairy @mrmoudz
Another “exceptional” year for luxury brand Hermès. The company reports revenue up 23% (at current exchange rates) for the year ending 2022, with net profitability of 29%. These year end results mirror the successes seen in the fourth quarter of 2022 — where sales also rose 23% (at current exchange ranges). With robust sales in its largest geographic market, Asia accounted for nearly half of the revenue. However, the greatest growth was seen, on a percentage basis, in the Americas.
Axel Dumas, Hermès’ Executive Chairman, said:
“In 2022, Hermès had an exceptional year thanks notably to the good performance of its international markets. This success reinforces our approach as an artisanal and highly integrated company, mainly in France.”
Read more here
With these results a dividend of €13.00 per share will be proposed. Also, Hermès plans to pay a bonus of €4000 to all employees in 2023.
Geographically, Hermès calls its sales growth “remarkable” across all geographic areas. It reports success in stores and wholesale activities, which it says benefitted from the recovery in “travel retail.” That is, tourist/vacation shopping, as when Americans poured overseas last summer, taking advantage of a strong dollar against the euro. Online sales continued to grow as well.
The Americas experienced the greatest growth, with a 32% spike in 2022. Moreover, comparing Q4 2021 to Q4 2022, revenues in the Americas rocketed 40.8%. However, with sales of €2138 million, the numbers are just under 40% of the total sales in Asia (not including Japan), which rose 21.9% to €5556 million.
Sales in France “improved strongly,” which Hermès attributes to demand from national and international clients. In other words, it benefited greatly from what seemed to be everyone’s holiday in Paris last summer. In fact, the strength of the U.S. dollar against the euro made shopping a bargain for Americans. Europe (excluding France) saw growth of 18% also due to locals and tourist travel.
photo courtesy @cocomeetshermes
In terms of business lines, Hermès’ largest group – Leather Goods & Saddlery – responsible for Birkins and Kellys and other handbags performed “particularly well” according to the brand. Up 16%, Hermès shoppers remained well-aware of a lack of availability of these items, at least through much of 2022. Hermès points to its continuing production expansion as two new facilities will come on line in 2023, with three others still in development.
Strong growth was seen in the Ready-to-Wear and Accessories division, up 36%. For anyone shopping women’s RTW in the last few seasons this is probably no surprise. The Hermès collections have been particularly au courant and fashionable.
And if you’re watching the Hermès watches, and adding to your collection as actor Ben Affleck did on his Paris honeymoon with Jennifer Lopez last summer, that too is on point. The Watches business line experienced “outstanding performance” up 46%, though it is a small division. Success in 2022 included the introduction of the new Hermès H08 men’s style.
Essential to point out is that Hermès achieved these financial results without the large and often repeated price increases on products imposed by other luxury brands like Chanel and Louis Vuitton. As has been the case for many years prior to 2023, Hermès product prices typically rose annually 1-3%.
Of course, Hermès aficionados are well aware — and as the brand warned customers in Fall 2022 — 2023 brought larger price hikes. Hermès points to increased costs, like labor to justify the increases. As PurseBop has reported, those imposed thus far on handbags have fallen mostly in the 5-8% range, though there are outliers.
For example, in the United States, the Birkin 25 and 30 in Togo leather prices rose 3 and 2.7%, respectively. Kelly Retourne bags in the same leather in 25, 28, and 32cm sizes, experienced larger price jumps, 10, 6.6, and 6.2%, respectively. Simply, that K25 now is $11,000, rather than $10K.
Prices for the über-popular Mini Kellys in Epsom and Chevre went up 5.5 and 6.2%, respectively. However, the cost of a Mini Kelly in Matte Gator rose 10.5%.
Find Hermès’ current 2023 prices and changes here:
Image courtesy @rinyks
If we were to make any over-generalization about these pricing changes, and we hesitate to do so, it’s that Hermès continues to see greater demand for small bags. As a result, many (but not all) of the small and smaller pieces experienced greater increases. The same is true for bags fabricated in exotic leathers.
Furthermore, for Americans traveling to Europe, purchasing Hermès abroad remains a bargain. Although the US dollar/euro exchange rate may not be as favorable as it was in summer 2022, euro prices actually are lower than those in the United States.
A B25 Togo in Europe currently costs €8050. At today’s exchange rate of about 1.07, that is $8630, or $1770 less than the U.S. price of $10,400. Add state sales tax to that number and savings by purchasing abroad really add up. That’s true even if you assume that any VAT refund is washed out by assessed U.S. duty when returning home.
In any event, given the continuing popularity and demand for these Hermes handbags, we doubt an increase of $1000 will affect sales. Birkins and Kellys remain elusive and exclusive. Most customers willing to pay, let’s say $10,000, will have few qualms about shelling out $11,000 instead.
Read more:
New Confirmed Hermès Prices in Europe 2023
What do you think? Might demand and desire for Hermès products decline? Or is this a case of the more the better? And, if Birkins aren’t available, maybe we should consider purchasing Hermès stock.
Hermès’ theme for 2023 is Astonishment. But, likely, none of us should be surprised by its continuing success.
Love, PurseBop
XO
Updated: February 21st, 2023
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