In a year marked by turbulence for many luxury brands, Hermès has delivered a standout performance, defying prevailing market trends.
The iconic French fashion house reported a remarkable 13.3 per cent increase in sales at constant exchange rates for the second quarter of 2024, reaching €3.7 billion (AU $6.1 billion). This impressive growth not only surpassed expectations but also highlighted Hermès’s exceptional resilience and strategic agility amidst a challenging luxury market landscape.
The company’s exceptional results were driven by impressive regional performances. Europe, excluding France, saw a remarkable 18 per cent rise in sales, while Japan experienced an even more impressive 19.5 per cent increase. Despite a challenging environment in Asia Pacific, where sales excluding Japan grew by 5.5 per cent, Hermès maintained a strong presence. The US also contributed positively, with sales up 13 per cent. Notably, while many luxury brands have faced difficulties in China, Hermès has managed to hold its ground effectively.
By category, Hermès showcased a diverse array of successful segments. Ready-to-wear and accessories saw a 15.1 per cent increase, reflecting the brand’s continued appeal in fashion. Leather goods and saddlery performed even better, with a 17.9 per cent growth, highlighting Hermès’s strength in this core category. Other sectors, including jewellery and home products, achieved a solid 13 per cent increase, while perfume and beauty lagged slightly behind with a 5.6 per cent rise.
These results position Hermès favourably against its competitors in the luxury sector. For comparison, Kering’s star brand Gucci faced a sharp 19 per cent sales drop, with the group’s profits plunging by 50 per cent in the first half of the year. Similarly, LVMH’s fashion and leather goods division reported a modest 1 per cent increase in sales for the same period. Richemont also reported a 1 per cent rise in sales for the quarter ending 30 June, while Burberry experienced a significant 20 per cent decline in retail sales year-on-year for Q1 2024. Hugo Boss reported a slight 1 per cent decrease in sales at constant exchange rates, and Moncler Group, which has also managed to perform well in China, saw an 8 per cent increase in sales for the first half of the year. Prada’s results are awaited, with the brand set to report its numbers on 30 July.
Éric du Halgouët, Hermès’s executive VP of finance, highlighted the company’s impressive financial trajectory, noting that Hermès had doubled its sales and tripled its net income between 2019 and 2023. This remarkable growth reflects a strategic and resilient approach in a challenging market. The brand’s EBIT margin remains the highest in the industry at 42 per cent, which is just 50 basis points lower than anticipated, according to Luca Solca, managing director of luxury goods at Bernstein.
The strength of Hermès’s performance can be attributed to several factors. The brand’s focus on exclusivity, quality, and heritage continues to resonate with high-end consumers, particularly in markets that value these attributes. Hermès’s ability to maintain high margins and navigate regional challenges effectively highlights its strategic prowess and operational efficiency.
Thus, while many luxury brands grapple with a turbulent market, Hermès’s second-quarter results reflect its enduring appeal and adaptability. The brand’s solid performance across various regions and categories underscores its resilience and strategic strength. As the luxury sector continues to evolve, Hermès stands out as a prime example of success amidst uncertainty, demonstrating that a focus on quality and exclusivity can lead to impressive growth even in challenging times.