- French luxury brand Hermès, famous for its pricey scarves and Birkin bags, reported impressive FY2022 results, with revenues up by 23% to €11.6bn and operating profit up by 33%. The business benefitted from strong demand and expanded production capacity, thanks to the recovery in travel retail and continued strength online. The company’s FY2022 results almost defy belief given the current economic environment – and is in-keeping with their theme of the year, “Astonishment”.
- Hermès’ business lines also saw growth in FY2022, with watches up by 46%, ready-to-wear and accessories up by 36%, other Hermès sectors up by 30%, and silk and textiles up by 20%. This growth was driven by the success of the ready-to-wear, fashion accessories, and footwear collections, among other factors. The seventh haute bijouterie collection, called Les jeux de l’ombre, was presented in Paris and New York, highlighting the full creative strength and singularity of the house.
- The company’s FY2022 sales by geography saw strong growth in the Americas (+32%), France (+27%), and Asia (excluding Japan) (+22%). The group has moved into 2023 with confidence, thanks to its highly integrated artisanal model, balanced distribution network, creativity of collections, and loyalty of clients. Despite economic, geopolitical, and monetary uncertainties around the world, Hermès confirms an ambitious goal for revenue growth at constant exchange rates in the medium term.
- Hermès’ unique business model, based on creativity, maintaining control over know-how, singular communication, and limited production, which has allowed it to pursue its long-term development strategy. Hermès as a brand oozes exclusivity. It has achieved a CAGR of 20.96% since 1999 versus the MSCI World’s 6.54%. The company’s success is all the more remarkable considering that it was founded in 1837 making luxury saddlebags. Like many of it’s products though, the share is a little pricey at these levels, but it is certainly a stock which we have on our watchlists.
- Here is a highly insightful podcast by Business Breakdowns on Hermès which is well worth a listen.By Lee Kern
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