PARIS – Hermès is still leading the pack.
The French luxury leather goods company is proving to be resilient in the face of slowing luxury spending, with sales up 18 percent in the fourth quarter at constant exchange rates to 3.36 billion euros.
Growth in the Americas was particularly strong in the three-month period to Dec. 31, with sales up 21.6 percent. Sales in Asia were up 14.8 percent at constant exchange rates, with Japan jumping 26.2 percent.
Those growth numbers put it ahead of LVMH Moët Hennessy Louis Vuitton, whose sales were up 5.5 percent in the fourth quarter and far ahead of rival Kering, whose sales fell 6 percent in the three months to Dec. 31.
“In 2023, Hermès has once again cultivated its singularity and achieved an outstanding performance in all métiers and across all regions against a high base. These solid results reflect the strong desirability of our collections and the commitment and talent of the house’s women and men. I thank them all warmly,” said Hermès chief executive officer Axel Dumas.
The company topped 13.42 billion in sales for the full year, up 21 percent at constant exchange rates, with a net profit of 4.31 billion euros.
The company continued “its strong brand momentum,” said Bernstein analyst Luca Solca. The numbers put it above consensus that had predicted a 13.7 percent growth.
“Importantly leather goods is ahead and double digits in the quarter, defying the usual end of year lull on the back of satiated store managers having met targets long before. Hermès is yet another company to confirm reviving momentum of the American consumers, on the back of resurgent confidence and lower inflation,” he said in a note after the release on Friday.
The company, famous for its Birkin and Kelly handbags, has been strengthening its other categories in recent quarters, with growth in the ready-to-wear and watches categories outpacing its core leather goods category. That trend continued over the holiday period, with ready-to-wear jumping 27.5 percent, while sales of leather goods were up 10.4 percent.
Beauty, an accessible and expanding category for the company, and its watch division both clocked 22 percent growth in the fourth quarter.
The company is combating the luxury sector’s recruitment issues with another bonus for employees, and will pay 4,000 euros to all staff worldwide as a reward for the year’s stellar results.
Consumers are spending on jetting around the world, benefiting Hermès wholesale activities, which were up 24 percent driven by the travel retail business in 2023.
Looking ahead, the company sees itself staying steady despite the geopolitical headwinds and slowing economic growth in other categories, as consumers become more cautious about their spending.
“In the medium-term, despite the economic, geopolitical, and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates,” it said in a statement.