by Maura Carlin, Editor
Luxury slowdown? What luxury slowdown? Hermès Paris reported “solid sales growth” in its Q1 2024 financial results earlier today. Revenues are up 13% over Q1 2023 at current exchange rates (17% at constant exchange rates). With these results, Hermès beat market expectations and demonstrated strength despite predictions of doom and gloom and the slower growth results reported by LVMH last week.
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Image courtesy @tamara
These Q1 results are largely consistent with Hermès’ 2023 Q4 revenue growth. For that period, which in most years is boosted by end-of-year and holiday sales, Hermès showed revenue growth of 18% (13% at constant exchange rates).
Hermès’ largest group, Leather Goods and Saddlery, posted a 20% revenue increase over Q1 2023, again with “sustained” demand. However, Hermès spiked prices on a large number of its popular leather products in early January 2024, perhaps helping to lift revenue numbers.
On the other hand, when reporting 2023 financials, CEO Axel Dumas stated that these increases were due to the increase in production costs and negative currency impact. Regardless, Hermès’ hallmark handbags are no easier to obtain. Indeed, the difficulty is now the subject of a California antitrust lawsuit complaining it is too hard to purchase Birkins and Kellys.
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The second largest business line (based on revenue), Ready-to-wear and Accessories, reported 16% revenue growth (at constant exchange rates). Hermès points to the success of its Spring-Summer 2024 fashion line as well as the popularity of accessories and shoes.
Chez Hermès decorating remains in vogue. The Other Hermès sectors, which includes Jewellery and Home goods, experienced revenue growth of 25% over Q1 2023.
Silk and Textiles, Perfume and Beauty, and Watches, all reported a Q1 revenue increase over Q1 2023 in the single digits.
Image courtesy Red
Geographically, all regions posted double-digit revenue growth (at constant exchange rates). Despite anxiety about the luxury consumer in China, that area (known as Asia-Pacific excl Japan) saw sales revenues rise 13.9% over Q1 2023. Japan, although most smaller, experienced 25.2% growth, perhaps due to the falling yen and economic advantage for tourist purchasing there.
France and Europe saw increased revenues of 14.3% and 14.6% respectively. And the Americas (which includes the United States) reported 11.8% revenue growth. For this market, which many have speculated on the pullback by the “aspirational consumer” Hermès may be less affected. Prices for its top products are less accessible, perhaps shielding Hermès from retrenchment in lower-level luxury spending.
Image courtesy @rinkys
Hermès is not alone in beating expectations and demonstrating growth. Prada also reported revenues this week, boasting an 11% increase in sales (16% at constant exchange rates). Little sister brand Miu Miu continues to soar, as its sales skyrocketed 89% year over year, no doubt buoying overall results.
LVMH’s results showed a slowdown despite growth. However, with such a broad set of business lines, overall numbers were further subdued by lagging groups like Wine & Spirits.
Gucci’s parent, Kering, likely fared the worst. It warned that first-half 2024 profits likely will decline by 40-45%. Last month’s heads-up anticipated a decline in first-quarter sales, which was confirmed this week as revenues slid 10% in a year-over-year comparison. Gucci recently changed creative directors, moving on from Alessandro Michele to Sabata de Sarno.
Kering also is home to Saint Laurent, Balenciaga, and Alexander McQueen, which saw a decline. Its Bottega Veneta bucked the trend with a modest increase, likely due in part to the popularity of its latest hot bag lines like the Andiamo, Sardine, etc.
Similarly, Valentino reported a 5% decline in revenues in Q1 as well, due to the “challenging global context for the luxury market.” Like Gucci, Valentino recently replaced its long-time creative director Pierpaolo Piccioli. New to the spot: Gucci’s outgoing director Michele.
Are you surprised that Hermès continues to succeed, where other brands are struggling? Let us know.
Love, PurseBop
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Updated: April 25th, 2024
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