Hermès bounces back big time: the luxury French fashion house sees annual sales and profits surge with record highs, despite rising inflation across the globe and China’s Covid-19 lockdowns

Feb 20 , 2023

Tourists are seen at an Hermès store in a shopping area of Tsim Sha Tsui, Hong Kong. Photo: Jonathan Wong

Hermès posted record annual profits and sales on Friday, February 17, riding a luxury boom while faring better than its rivals in China in the last quarter of 2022.

France’s high-fashion houses have posted bumper earnings despite high inflation that has caused a cost-of-living crunch in many countries.

Hermès said net profit reached US$3.6 billion (3.4 billion euros) last year, a 38 per cent jump from 2021.

A man walks with Hermès shopping bags as he leaves an Hermès store in Paris, in March 2013. Photo: Reuters

Sales rose 29 per cent to US$12.4 billion (11.6 billion euros) at current exchange rates, slightly higher than forecast by analysts surveyed by financial data firm FactSet.

Hermès “enters 2023 with confidence, on the strength of its unique and particularly solid business model”, chief executive Axel Dumas said in a conference call.

The last year was “very strong despite all the uncertainties” thanks to the attractiveness of its brand, he said.

A craftswoman works on a Birkin bag at the luxury goods Hermès factory in Seloncourt, in October 2013. Photo: Reuters

LVMH, the world’s top luxury group whose business includes handbags, jewellery and champagne, posted US$15 billion (14 billion euros) in profits and US$86 billion (79 billion euros) in sales last year – both records.

It also became Europe’s most valuable company last month, with a market capitalisation that soared to US$430 billion (400 billion euros).

French rival Kering, whose brands includes Gucci and Yves Saint Laurent, reported earlier last week a 14 per cent jump in net profit to US$3.9 billion (3.6 billion euros) last year.

Shoppers outside an Hermès store in Causeway Bay, Hong Kong. Photo: Xiaomei Chen

But LVMH and Kering said their sales fell in China in the fourth quarter as the world’s second biggest economy only lifted its Covid-19 restrictions in December.

By contrast, Hermès said its sales rose by 30.7 per cent in the Asia-Pacific region, excluding Japan, in the last three months of the year.

Dumas said there was “strong” demand for Hermès in China during that period.

Sales in the Americas region surged by 46 per cent to exceed US$2.1 billion (two billion euros). They were up 21.5 per cent in Europe to US$2.8 billion (2.6 billion euros).

“I have a hard time finding you a region that’s not doing well,” Dumas told reporters.

Hermès announced a US$13.9 (13 euros) per share dividend for shareholders and a special bonus of US$4,200 (4,000 euros) to all staff worldwide at the end of the month.

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Hermès

Despite all the uncertainties that luxury fashion houses have faced in recent months with Covid-19 and the cost-of-living crisis, Hermès posted a US$3.6 billion record in net profit for 2022
The news comes after the world’s biggest luxury conglomerate LVMH shared its record-breaking US$15 billion profit margin while Kering, behind Gucci and Yves Saint Laurent, also saw excellent results