Fearless of the luxury goods winter! Hermès' fourth-quarter sales exceeded expectations with an 18% growth | Financial Report Insights
All departments achieved growth in the fourth quarter, including the struggling watch business. The largest department, leather goods and saddlery, saw sales increase by nearly 22%, exceeding expectations
Benefiting from the strong demand brought by the holiday shopping season, Hermès once again "swam against the current" in a weak luxury goods market, with fourth-quarter sales exceeding expectations with an 18% growth, continuing the resilient performance from the third quarter, and the annual recurring operating income surpassing market expectations.
On Friday, February 14, Hermès announced its fourth-quarter financial report, which showed:
At constant exchange rates, the company's fourth-quarter sales reached €4 billion, an increase of nearly 18%, exceeding analysts' expectations of 11%. The performance in regions including China and the Americas was far better than expected.
All departments achieved growth in the fourth quarter, including the struggling watch business. The largest department, leather goods and saddlery, saw sales increase by nearly 22%, surpassing expectations.
For the full year, Hermès' revenue reached €15.2 billion in 2024, growing 15% at constant exchange rates, with all geographical regions achieving robust growth. The recurring operating income was €6.2 billion, a 9% increase from €5.7 billion in 2023.
From an industry perspective, Hermès' performance outperformed major competitors such as Kering Group, the parent company of Gucci, and LVMH, with LVMH's fourth-quarter operating income at €23.93 billion, a year-on-year decline of 0.08%. Analysts believe that part of the reason is that Hermès primarily serves the world's wealthiest groups, whose spending tends to be more stable than that of other customers during economic downturns. The company's iconic Birkin and Kelly bags continue to be in high demand, with long waiting lists highlighting the brand's scarcity and appeal.
Hermès Executive Chairman Axel Dumas stated that the company plans to raise prices globally by 6%-7% this year and will pay a bonus of €4,500 (approximately $4,700) to its more than 25,000 employees.
The company also announced on Friday that Hermès plans to distribute a special dividend of €10 per share. Since the beginning of this year, Hermès' stock price in the U.S. has risen by over 26%.
