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· Posted on
February 21, 2024

Can't touch this: Hermès sees its sales boom 'cos the luxury market ain't feeling the cost-of-living crisis

Hermès is showing no signs of slowing down with its latest boom in sales.

What's the key learning?

  • Hermès grew its total revenue by over 24% compared to the same time last year due to Covid restrictions being lifted in China and US travellers to Europe leveraging their strong USD and spending big while on vacay.
  • In a tightening economy, it’s the mid-market brands that are most vulnerable to a fall.
  • When cost of living rises, most people head towards the cheaper, ‘value’ items but the luxury market is also proving to be immune to the drop in spending.

👉Background: Hermès is a French luxury design house that was established in 1837. It specialises in leather goods, jewellery, watches and is known to be worn by every celeb under the sun.

👉 What happened: Over the last quarter, Hermès grew its total revenue by over 24% compared to the same time last year. There are two key reasons:

  1. Covid restrictions were lifted in one of its most important markets -  China
  2. US travellers to Europe leveraged their strong USD and spent big while on vacation

👉 What else: But with entry points around $10,000 for a bag.. It’s still for a certain type of customer.

What's the key learning?

💡In a tightening economy, it’s the mid-market brands that are most vulnerable to a fall. When cost of living rises, most people head towards the cheaper, ‘value’ items. But the luxury market is also proving to be immune to the drop in spending.

💡Think about another big name player in the luxury space - LVMH (owner of Louis Vuitton, Christian Dior and many more) also announced very strong results over the last couple of weeks.

💡And it makes sense: global financial wealth actually increased last year by 10.6% last year. Hence why we’re seeing a boom in luxury spending.

‍

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