What will stop Hermès? The brand managed to improve on its already extremely standard with regards to profitability. The ending line of the statement for 2023 reached a historic high of 42.1% of revenue, compared to 40.5% in 2022. No other player in the luxury industry is capable of doing the same thing. The result was achieved even at a time during which costs rose and inflation hit, beside from a year during which the brand hired 2,400 new employees. The increment of prices (which will continue this year), and the desirability of the brand are the two elements to have made a difference. Sales during the 4th quarter are further proof, as they grew 18% at constant rates (and +13% at current ones). The position of strength Hermès finds itself in allows it to say it’s “incompatible with LVMH”.
Incompatible with LVMH
Hermès’ Patrick Albaladejo stated that the brand has had no contact with LVMH. Last week Bernard Arnault, CEO of LVMH, and (sadly) shareholder of Hermès, offered to collaborate with the former to create economies of scale. “Whatever the tone may have been, the two entities remain incompatible”, said Albaladejo (source Reuters). A strong position that testifies the strength of the French brand, capable of closing 2023 with a revenue of 13.43 billion euro, +21% at constant rate and +16% at current rates.
Impressive dividend
Profitability also grew, with net profits increasing by 28% (4.31 billion euro). That’s why the company announced a plan to pay an additional dividend of 10 euro per share. Sales for the Leather Goods and Saddlery increased 17%, while the Ready-to-wear and Accessories ones by 28%, “thanks to the success of the prêt-à-porter lines and footwear”. Completely impervious to the market, revenue during the 4th quarter of 2023 was 3.36 billion, up 13% at current rates. The overall increment was above the +14% forecasted by analysts, according to the consensus of Visible Alpha cited by Reuters.
New hires
Hermès added 2,400 employees to its workforce in 2023, effectively now having 22,040 workers, 12,700 of which in France. In the last 3 years it has created 5,400 new jobs, 3,300 of which in France. All employees will be given a 4,000 euro bonus for the year. The company plans on opening 4 new production sites in the next 4 years.
Higher price tags
Hermès also plans to raise its price tags by between 8% and 9% around the world, said to journalists CEO, Axel Dumas. Throughout 2023, the luxury brand increased prices by 7% globally, with the exception of the USA (+3%) and Japan (where they grew by double-digit rates due to inflation). Hermès confirmed its ambitious growth targets for 2024.
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