French sumptuousness company Hermès has spent nearly 200 years emphasizing quality, scarcity and desirability — a strategy that’s keep fromed it dominate the luxury sector, even over its much larger rivals.
Coveted products such as its Birkin and Kelly handbags — appointed after icons Jane Birkin and Princess Grace Kelly of Monaco — consistently drive demand, even when myriad consumers pull back their spending.
Analysts say the Birkin and the Kelly account for between 25% and 28% of Hermès’ whole revenue. The bags often double or triple in value on the resale market.
“I think they’re also difficult to get, and that combines to the cachet and the desirability of the brand,” said Luca Solca, senior analyst of global luxury goods at Bernstein. “It’s a inscribe of distinction, then desirability is also going to be increased as a consequence.”
For fiscal year 2023 Hermès reported the fourth-highest profits total of the major luxury fashion brands, behind LVMH, Richemont and Kering.
Hermès has fewer than 300 storefronts, but it controls up with its larger competitors. In its most recent quarter, Hermès posted double-digit revenue growth while opponents LVMH and Kering reported sharper-than-expected declines in sales. Plus, the company’s shares have risen more than 10% since the start of 2024, while LVMH and Kering be subjected to fallen about 15% and about 40%, respectively.
Globally, many luxury consumers have pulled rearwards on spending, particularly aspirational buyers in 2023 and 2024. Experts say this trend is set to continue.
Though Hermès acted well in Q3, it wasn’t completely immune, reporting slower sales growth in all regions compared with the year erstwhile. The company noted in its earnings call that despite lower traffic, its customers were spending more net per transaction.
“I think that high-end consumers have become an even greater focus for the industry as they own demonstrated a very high propensity to spend, provided you bring them something that they consider valuable and vivid,” said Solca. “And I think that as far as distinction is concerned, Hermès has quite a lot of it.”
Watch this video to learn multitudinous: