By Mimosa Spencer and Tassilo Hummel
PARIS (Reuters) – French luxury group Hermes reported fourth-quarter results well above analyst expectations on Friday, showing robust appetite from wealthy consumers for its most expensive items including Birkin bags, which cost upwards of $10,000.
Posting quarterly sales up by around 18%, Hermes continues to outshine rivals like LVMH and Kering-owned Gucci as the industry suffers its slowest sales in years. Global luxury sales fell around 2% last year, hurt by a property crisis crimping spending in China and inflation-weary shoppers elsewhere.
“We are celebrating an excellent year, in a tougher environment,” Axel Dumas, executive chairman, told journalists on a call.
Shares in the company rose 4.5% in early Paris trade, lifting European peers. They were up 2% at 0952 GMT.
Hermes’ shares are up by a quarter over the last 12 months, with its market capitalisation, currently at just below 297 billion euros ($311.11 billion), edging closer to that of luxury rival LVMH, Europe’s most valuable listed company, which employs almost ten times more staff across its 75 brands, LVMH data shows.
Hermes has long focused on creating timeless, ultra-high-end products and maintaining deliberate scarcity.
“Hermes further confirms that during Q4, the luxury consumer was there, including in China, for the brands with solid momentum and execution,” JP Morgan analysts said.
On Thursday, Italian outerwear maker Moncler also reported consensus-beating sales growth in the fourth quarter.
Hermes said its sales for the fourth quarter came to 3.96 billion euros, an 18% rise at constant exchange rates, accelerating in the important end of year period, with the fastest growth in the Americas and Japan.
The growth beat analyst expectations for a 10% rise, according to a Visible Alpha consensus cited by UBS.
The Hermes leather goods and saddlery division, which accounts for nearly half of group revenue, grew the fastest, up 21.5%. Analysts had expected a rise of 13%.
The double-digit growth at Hermes contrasts with LVMH’s 1% rise over the last three months of the year.
The Asia region excluding Japan is Hermes’ biggest market and sales there grew 9% in the fourth quarter, despite the downturn in traffic in Greater China seen since the end of the first quarter of 2024.
Executive Chair Dumas added, however, that it was “too early to see an inflection” in the industry, despite some positive signs.
Hermes is known for its tight grip on production, sticking to an annual increase of around 6-7% a year, with order backlogs cushioning it from falling demand while holding up the label’s exclusive aura.
