French luxury group Hermes reported an 18% rise in fourth quarter sales on Friday, showing robust appetite from wealthy shoppers for the most expensive luxury items like its Birkin bags, which cost upwards of $10,000.
Hermes continues to outshine rivals like LVMH and Kering-owned Gucci thanks to its wealthier customers as the industry suffers its slowest sales in years. Global luxury sales fell around 2% last year, hurt by a property crisis crimping spending in China and inflation-weary shoppers elsewhere.
"We are celebrating an excellent year, in a tougher environment," Axel Dumas, executive chairman, told journalists on a call.
Sales for the fourth quarter came to 3.96 billion euros ($4.14 billion), an 18% rise at constant exchange rates, accelerating in the important end of year period, with the fastest growth in the Americas and Japan.
The growth beat analyst expectations for a 10% rise, according to a Visible Alpha consensus cited by UBS.
The Hermes leather goods and saddlery division, which accounts for nearly half of group revenue, grew the fastest, up 21.5%. Analysts had expected a rise of 13%.
The double-digit growth at Hermes contrasts with LVMH's 1% rise over the last three months of the year.
Hermes also reported 9% growth in sales in the Asia region excluding Japan, the label's biggest market, despite the downturn in traffic in Greater China seen since the end of the first quarter of 2024.
Dumas added, however, that it was "too early to see an inflection" in the industry, despite some positive signs.
Hermes is known for its tight grip on production, sticking to an annual increase of around 6-7% a year, with order backlogs cushioning it from falling demand while holding up the label's exclusive aura.
Sales in the Americas region clocked 22.3% growth, matching growth in Japan.
Asked about the impact from potential US tariffs on European goods, Dumas said the company would not adjust its production.
"We are attached to keeping our production where it is," he said, citing France for leather goods, Switzerland for watches and Italy for shoes.
"We'll adapt to tariffs, and raise prices accordingly," he added.
The company is raising prices 6-7% this year to reflect higher production costs and exchange rates, Dumas added.
