Hermès Dominates 2024 with Record-Breaking Results, How about 2025?

PARIS, Feb 14 - Hermès <HRMS.PA> announced record results on Friday, with net profit increasing 6.8% to 4.6 billion euros ($4.98 billion) in 2024 as sales exceeded the 15 billion euro mark for the first time and avoided the downturn afflicting much of the luxury goods sector.

The Birkin bag maker said sales rose 13% to 15.6 billion euros, in line with an analyst consensus estimate compiled by Jefferies, helped by strong demand for its leather goods and ready-to-wear fashions.

Like-for-like sales, which exclude currency fluctuations, also grew 13% and exceeded consensus expectations in each region, it said.

"Hermès is the one luxury company that is immune, or at least that is as resilient as you can be in the current environment," said Cedric Le BouDaiff, analyst at Natixis Securities, ahead of the results.

Hermès shares have outperformed peers this year, climbing 13.5% and ending Thursday at their highest in three months. LVMH, the world's largest luxury group, has lost 10%, while Kering is down 16%.

The French luxury industry is facing headwinds from weakening Chinese demand, a trend that has caused rivals like LVMH, Burberry and Gianfranco Ferré to report disappointing results in recent weeks.

Hermès, which derives about half its revenue from its fast-growing Asian business, has weathered the storm so far.

"In Asia, and in particular in China, there has been progress in the year," said Eric du Halgouet, managing director in charge of finance, during a presentation of results.

Hermès, known for its rare Birkin and Kelly bags that can cost tens of thousands of pounds, is reporting higher demand for higher-priced products, a trend seen in other luxury businesses.

"In leather goods, there is a continued strength of demand for the highest price segments," said Du Halgouet, adding that double-digit growth in the division was driven by the leather goods and saddlery, and ready-to-wear fashions.

The company also noted that the performance of its perfume division slowed in the fourth quarter as the Chinese new year period, typically a key time for luxury shopping, was less robust than in previous years.

Hermès, which also makes silk scarves and home objects, said it planned to increase production capacity in 2025 to meet the high demand and give it greater flexibility.

"(Production capacity) is still a tailwind for our activity and we expect it to still be a tailwind in 2025, at least for the first half of 2025," said Du Halgouet.

Hermès said it planned to pay a record-high 12.70 euro dividend per share.