Hermès got three confirmations: the strength of the brand, the pull of handbags, and the positive performance of the super-luxury segment. In the first three months of 2024, sales of the French fashion house increased 17% at constant exchange rates and 12.6% at current exchange rates, to 3.81 billion euro. Leather goods placed +20.3%. Hermès reiterated its “confidence” for 2024 and confirmed its ambitious goal of incrementing sales in the medium-term. “Hermès is pursuing its strategy, which is based on exceptional savoir-faire, the use of finest materials, and uncompromising quality,” commented CEO Axel Dumas.
Exceptional savoir-faire
Hermès’ reported revenues above the forecasts of +13%, circulated by Visible Alpha (source: Reuters). The French fashion house has always been a lighthouse of resilience, and is benefiting from the polarization of the luxury market during this period. In other words, a push from high-end consumers who prefer to focus their purchases toward prestigious brands, as they are synonymous of super-luxury. It is no coincidence that the revenues of its Maroquinerie-Sellerie division grew by more than 20%. Hermès also spoke of “particularly buoyant demand” for its handbags. The footwear segment also did well, as the Vêtement et Accessoires division grew 16%. In the official press release, the brand says that “nearly 100 million euro in total bonuses” were distributed to employees worldwide.
Pricing-setting power
Its “defensive” profile, price-setting power and level of brand desirability, are the brand’s strengths according to Barclays analyst Carole Madjo (source WWD). Citi’s Thomas Chauvet and Bernstein’s Luca Solca, on the other hand, dwell on the price factor. The former explains that rising receipts (+7% in 2023 and +8-9% in 2024) will support revenues even while facing a “risk of normalization of growth in non-leather categories.” The latter says the company has benefited from “a significantly deeper price increase reserve as it has come in behind the price increases of post-pandemic competitors.”
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