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Hermes on Friday beat analysts’ expectations in posting record sales for the full-year 2023, as the French firm successfully weathered the slump in the luxury goods market that has pummeled the world’s top fashion houses in recent months.
The Parisian company saw its full-year revenue increase 20%, to €13.42 billion ($14.45 billion), with sales increasing for the leather goods specialist across all regions and segments in an uptick that saw its net profit increase 28% to €4.3 billion.
Shares in Hermes
RMS,
jumped 3% on Friday having gained 26% over the previous 12 months.
The French company which is best known for its Birkin handbags saw its sales buoyed by a 20.2% surge in revenue from its largest Asian segment, which generated €7.53 billion, on the back of a 26% uptick in sales in Japan.
Hermes also saw sharp increases in its sales in Europe, where its revenue increased by 20% to €3.09 billion, and in the Americas, where its sales increased 20.5% to €2.5 billion, as it benefited from buoyant sales to tourists and travelers.
Third Bridge analyst Yanmei Tang said Hermes, like its main rival LVMH Moet Henessy Louis Vuitton
MC,
had benefited from having a wealthier customer base, with large amounts of discretionary income, than many of its major competitors.
The worldwide slump in the luxury goods market has had the hardest impact on those firms focused on the mid-luxury market – such as Burberry
BRBY,
– who rely on business from less wealthy customers, who have reigned in their spending in the face of the global economic slowdown.
Hermes, which was first established as a saddlemaker in 1828, meanwhile, saw sales from its largest leather goods and saddlery division increase 17%, to €5.55 billion, as it pushed forwards with plans to expand production by opening two new factories in France.
The fashion house posted a particularly sharp uptick in sales from its second largest clothing and accessories division, which saw its revenues grow by 28% in 2023, to €3.88 billion.
The Paris listed company also saw strong growth in its watchmaking division, which saw revenues increase by 23% to €611 million, in line with the firm’s efforts to expand to areas outside its traditional leather goods business.
Third Bridge analyst Tang said “growing social media hype” around products including its Oran sandals, which have been widely discussed on TikTok, is now set to boost Hermes’ business even further in the U.S, as he predicted high single digit sales growth in 2024.
Hermes’ fast-paced growth saw it make gains in catching up with its much larger French rival, LVMH Moet Hennessy Louis Vuitton, which previously saw its full-year revenue increase by 10% in 2023 to €86.2 billion.
