Hermès Bucks Luxury Downturn as Q4 Sales Jump 18%

Rhonda Richford

14 February 2025 at 2:56 am·7-min read

PARIS — Hermès International continues its streak as the leader of the luxury pack, with sales up 18 percent at constant exchange in the fourth quarter to 4 billion euros.

That bucked the trend among its rivals, including LVMH Moët Hennessy Louis Vuitton, which reported organic revenues up just 1 percent in the fourth quarter, and Kering, which saw sales erode 12 percent in the fourth quarter.

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Hermès handily beat analysts’ projections, which had seen Hermès hit around 11 percent growth at constant currency in the fourth quarter and exceed its third-quarter sales of 3.7 billion euros.

Shares jumped 2.1 percent on the Paris bourse as investors applauded the numbers. Analysts reacted positively to the news.

In a note, Bernstein’s Luca Solca called the brand part of an “elite club smashing [fourth-quarter] forecasts.” The numbers are “proving the resilience and popularity of the brand among the affluent customer segment,” he said.

“With continued brand heat in both handbags and non-leather categories (in particular rtw and jewelry), supply/demand imbalances in leather goods….Hermès is well-positioned in 2025,” said Citi analyst Thomas Chauvet.

Hermès chief executive officer Axel Dumas highlighted the solid performance of the company, despite the headwinds roiling its rivals.

Loyal clients and its local-first retail model were two of the factors Dumas credited for the brand’s success, as well as “authenticity.”

“We don’t do marketing, we don’t try to create an illusion by paying people to wear our products,” he said of the brand’s strategy of focusing on artisans.

The other illusion rocking the brand has been the proliferation of “dupes,” particularly the popularity of a Walmart bag similar to its famous Birkin design, dubbed the “Wirkin” on TikTok.

Dumas said the that the company takes counterfeits seriously, and the official stance of the company is that it will “fight [dupes] with all our means with people who know the law.” But unofficially, he added that on a personal level, the media attention to the bag “irritated” him, even though he also understood the stance of people who purchased it and discussed the brand on social media.

“It was quite touching to say, ‘We respect Hermès. We can’t afford it, but in the meantime, I feel like dreaming about it.’ Nobody bought this fake product thinking that it was an equivalent product. They know about the difference in quality…there was no ambiguity,” he said, noting that popularized dupes are different than counterfeits.

He added that while Hermès prides itself on selling quality products rather than selling a particular style, and that, while flattering, protecting design from dupes should be thought of in a new way. Dumas turned to the example of the debate around AI, which has seen artists organizing against using their works to train the tech. He asserted the media and public should look at dupes as similarly stealing the creativity of designers.

Dumas said potential tariffs by the U.S. on European goods was a “source of concern.” Any increase in tariffs would lead to a corresponding price increase for customers, as the company had not planned ahead by hoarding excess stock in the U.S. in anticipation.

However, he noted that American shoppers are highly aware of price comparing and are loyal enough to travel to other regions to purchase products without a penalty.

Such client behavior helps ease his worry on any potential shifts, he said, and the company is going full steam ahead with its expansion strategy with openings planned for Phoenix, Ariz., and Nashville later this year.

Sales in the Americas were up 22.3 percent in the fourth quarter, spurred on by openings of new stores in Atlanta and Princeton, N.J., earlier in the year.

The company has seen impacts from “climate events” in the U.S., Dumas said, namely the Los Angeles fires, the blizzard in the northwest and hurricanes in Florida, which prompted some store closures. However, the “ups and downs will be offset” by pent-up demand and the company does not expect long-term sales impact, he concluded.

Growth in Asia excluding Japan was up 7 percent in the fourth quarter, despite a downturn in China hitting other luxury brands. Hermès reopened its expanded store in Shenyang’s MixC mall in December, following openings in Shenzhen and Beijing earlier in the year. A new store in Singapore also boosted those sales.

In China, the company has seen its loyal customers remain a source of strength, while it has not seen an increase in footfall in stores. Sales continue to be “quite sluggish” due to the hard-hit real estate market there.

Europe also remained strong in the fourth quarter, with sales in the territory excluding France up 20.7 percent. Sales in its home country were up 11.8 percent. A new store in Florence opened Friday.

Sales in the Middle East region were up 123.2 percent in the three months to Dec. 31, after Hermès became a majority shareholder of its retail network in UAE alongside distribution partner Al Mana earlier in the year as it continues to pursue an integration strategy.

Japan was once again strong on local clients with two new stores in Tokyo and hit 22.4 percent growth in the quarter.

Sales in the leather goods category, including its Birkin and Kelly bags, were up 21.5 percent, while its ready-to-wear and accessories, including shoes, were up 17 percent in the fourth quarter.

Ready-to-wear is led by a loyal customer base that is “slightly more exclusive, a bit more resilient,” that are seeking refuge from other, flashier brands, Dumas said, and less diverse and aspirational than its handbag customers.

That loyalty will give the company a good base to launch its planned haute couture, though the company is taking its time on development and sees that happening in late 2026 or early 2027.

Due to strong demand, Dumas also said the company is looking to increase the frequency of its haute bijouterie jewelry collections, which are now presented twice a year off calendar, but he did not provide a timeframe for any acceleration. “We are not going to force ourselves,” he said.

Sales in the combined jewelry and home goods category were up a 17 percent in the quarter.

Watch sales were sluggish, up just 2 percent, amid a worldwide slowdown in the category. Dumas chalked some of that slowdown up to the strong sales since 2022 tempering demand this year, as well as being penalized by exchange rates. The company will focus on tightening delivery schedules for various regions.

“I think we also made some mistakes, and so we have things to improve in the house. I remain very confident for the follow up, because we have a fair amount of investments to come in watches,” he said.

Its perfume and beauty category was boosted by the release of a new fragrance in the quarter, with sales jumping 17 percent. The company will introduce a silky lipstick range in the first half of the year. Its anticipated launch into skin care is still in the cards, though it’s currently at the product development stage and Dumas did not give a time frame for launch.

Famous for its scarves, the brand saw slowing sales in the category, though they were still up by 7 percent in the quarter. Net profit hit 4.6 billion euros, with consolidated revenue up 15 percent at constant exchange rates.

To thank its teams, Hermès will be issuing a 4,500-euro bonus to all its employees, the company said. It will continue to add to those ranks, with plans to open three new workshops in France over the next two years.

Dumas said there is no plan to acquire other brands and grow into a conglomerate like its peers; instead, the company has snapped up shares in its jewelry and shoe production partners to shore up its vertical integration strategy.

“We know how to do Hermès, I’m not sure we know how to do anything else. I’m not sure that we could buy up another company and impose on it in the Hermès model. I think it’d be counterproductive,” he said.

The company retains its buoyant outlook in the near term, despite increased political and economic uncertainty leaving consumers more cautious and will continue to with its strategy of store openings in smaller cities throughout the year.

“The group has moved into 2025 with confidence, thanks to the highly integrated artisanal model, the balanced distribution network, the creativity of collections and the loyalty of clients,” it said in a statement. “Hermès is pursuing its long-term development strategy based on creativity, maintaining control over know-how and singular communication.”

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