Hermès Birkins and Kellys Weathered the Pandemic Storm in 2020

Hermès Miami District @pursebop

Proving once again nearly pandemic proof, Hermès Paris beat financial expectations with the release of its 2020 year end results. True, consolidated revenue was down 6% (7% at current exchange rates). However, in the second half of 2020 – despite many lockdowns in effect – Hermès returned to growth, and the fourth quarter (e.g. holiday season) showed a nearly 16% increase over 2019 (not just prior 2020 quarters). Indeed, fourth quarter store revenues rose 21%, despite a 2% decline for the year.

So, what accounted for this relative success during the harshest of conditions? Clearly, the demand for Birkins and Kellys and most things Hermès isn’t going away. As previously reported, demand for top tier luxury brands persisted throughout the pandemic. Moreover, with travel limited, customers purchased at home or online. Fortunately for Hermès, it has and even continued to open new stores and build out its digital presence.

Read:

Even With A Worldwide Shutdown, We’re Still Buying Hermès
Even In a Global Shutdown, Hermès Leads the Luxury Industry
Which Two Luxury Brands Nailed Success Amid the Hardest Time

Black Birkin 25, Miami, read more via @pursebop here (swift leather). 

More specifically, however, the amazing results come from Asia (not including Japan), where restrictions lessened in the latter part of 2020. This geographic area posted 14% growth for the year and a whopping 47% increase in the fourth quarter. Japan ended the year down 4%, with improvement in the second half of the year. For the Americas, down 21% for the year, there was slight growth in the fourth quarter. Europe (excluding France) and France continued to suffer from store closures and restrictions.

Our favorite product group – Leather Goods and Saddlery which is home to those Birkins and Kellys – did experience a 5% decline in sales for the year, but resumed growth in the second half of the year with an 18% jump in the fourth quarter. Not surprising, when you consider all the store and production facility closures…you can’t sell what you can’t make! And, as the PurseBop community makes clear, demand for these handbags shows no sign of decline or abatement.

Perhaps (or perhaps not) one stunning success (up 24% for the year and 54% in the fourth quarter)  is that of the “other” business line, which includes home goods. Apparently, many are decorating à la Maison Hermès.

Hermès Carlotta mules, read more via @pursebop here. 

As an interesting aside, just recently, for Valentine’s Day, actor Michael B. Jordan, gifted Hermès stock to his girlfriend Lori Harvey (talk show host Steve Harvey’s daughter). Wise to further financial growth, sure. But we also couldn’t help wondering whether it was easier to buy shares than to secure a Birkin.

Example of Hermès online sales. Custom special order Calvi and Bastia. Read: Reveal: My Hermès Special Order Bastia and Calvi Finally Arrived

Hermès success and stability compares and contrasts to other luxury brands. Gucci’s parent company, Kering, announced a decline in full year and fourth quarter 2020 profits as well as a strategy pivot. LVMH Louis Vuitton, the parent company of Louis Vuitton, experienced a 16% decline in organic revenue in 2020 compared to 2019. However, it also reported double digit sales for Fashion and Leather Goods in the third and fourth quarters. Recognizing that LVMH (like Kering but larger) holds many different brands and categories, the comparison is not complete, but suffice it to say that LVMH did better than Kering, and Hermès exceeded both.

Does Hermès’ relative success surprise you? Did the pandemic affect your luxury buying? Let us know.

Love, PurseBop
XO

Curated By Monika