PARIS — Hermès reported another year of chart-topping growth, with annual sales rising 21 percent to €13.4 billion ($14.4 billion). Fourth-quarter sales rose 18 percent, beating expectations and defying the wider slowdown in luxury demand.
The French leather goods powerhouse has long been luxury’s most defensive player, with pent-up demand for its sold-out Birkin and Kelly bags helping the brand to fend off downturns in the broader market.
In recent years, Hermès has also grown sales across categories as top-spending bag collectors buy deeply across the company’s product assortment in a bid to curry favour with sales associates and young aspirational clients learn to recognise (and covet) signature items like enamel bracelets and anchor chain earrings. The brand’s fastest growing categories last year were ready-to-wear and fashion accessories (up 28 percent), jewellery and homeware (up 26 percent), and watches (up 23 percent), the brand said.
Hermès joins a handful of players that have continued to expand amid a broader slowdown for luxury. Louis Vuitton- and Dior-owner LVMH, Cartier-owner Richemont and Italian top-end ready-to-wear specialists Zegna and Brunello Cucinelli all reported double-digit growth in the fourth quarter, while sales were negative at Gucci-owner Kering, Burberry and Ferragamo.
In a meeting with analysts and journalists, CEO Axel Dumas said the brand would raise prices this year by between 8 and 9 percent. In recent years, Hermès has implemented more modest increases compared to rivals that hiked prices aggressively: many Chanel handbags are now priced higher than Hermès’ flagship Birkin style, historically the industry’s most expensive bag.Hermès’ move to increase prices comes as most other brands back away from price hikes in response to softer demand and slowing inflation in key markets. Hermès said the move was simply a function of rising costs.
”We don’t have any price marketing policy; we don’t raise prices on a product just because it’s very desirable,” Dumas said. “Our price policy is virtuous because it’s authentic. Clients in stores notice that the prices are coherent.”