Hermès, the renowned luxury brand, has defied the odds and achieved remarkable growth in 2021, despite the difficulties presented by the pandemic. The company’s sales results for the fourth quarter and full year highlight the enduring popularity and resilience of the brand among global luxury consumers.

Although Hermès’ sales in Q4 saw an 11% increase, slightly below analysts’ expectations, this was not due to a lack of demand. Rather, it was a result of production limitations that restricted the availability of the brand’s highly coveted bags and other goods, creating an even stronger desire among consumers.

The total sales for the last three months of 2021 amounted to €2.38 billion, driven by robust growth in the United States market. This trend of increased sales among American consumers has been observed by other leading luxury brands as well.

However, the capacity constraints led to a 5.4% decline in sales for the leather goods and saddlery division. Despite this setback, Hermès achieved outstanding results for the entire year, with revenue soaring by 42% at constant exchange rates to reach €8.98 billion. Comparing sales to pre-pandemic levels, the company experienced an impressive 33% increase over a two-year period.

The recurring operating income witnessed a remarkable growth of 78%, amounting to €3.5 billion, and net income surged by 77% to €2.445 billion. Sales in Hermès’ physical stores rose by 44% compared to 2020 and by 41% over a two-year period. Despite the challenges faced by travel retail, the wholesale channel also recorded a growth of 24%.

Upon analyzing the regional performance, it became evident that Asia and America stood out with the highest growth rates in comparison to both 2020 and 2019. Europe, which had been greatly impacted by the decline in tourist arrivals since the onset of the pandemic, experienced a return to growth compared to pre-Covid levels. This recovery suggests that domestic shoppers and returning tourists are contributing to the positive trend in Europe.

Despite the restrictions imposed in several US cities during Q4, the American market demonstrated exceptional performance, witnessing a staggering 57% increase in sales compared to the previous year and a 24% increase over a two-year period. Asia, excluding Japan, experienced significant growth of 45% over one year and 65% over two years, driven by sustained performance in Greater China, Australia, and Singapore. Japan also experienced a sales increase of 25% and 20% over one and two years, respectively, thanks to loyal local customers and the lifting of health restrictions.

Europe, excluding France, witnessed a 37% increase in sales over one year and 10% over two years. The region had a strong second half of the year characterized by the expansion of the local customer base, partially compensating for the decline in tourist traffic. France saw a 35% increase in sales compared to 2020 but remained 3% lower than in 2019 due to a decrease in tourist visits to Paris stores during Q4.

All product categories within Hermès experienced growth. The Leather Goods and Saddlery division saw exceptional sales performance, with a 29% increase over one year and 23% over two years, despite temporary production constraints in Q4. Demand for both new bags and classic Hermès products remained strong. The Ready-to-wear and Accessories business line showcased dynamic growth, with a 59% increase over one year and 44% over two years, fueled by the success of the ready-to-wear, fashion accessories, and footwear collections. The SS22 collections for both men and women received particularly positive feedback.

Other business lines, including Silk and Textiles (+49% over one year and +15% over two years), Perfumes and Beauty (+47% over one year and +19% over two years), Watches (+73% over one year and +77% over two years), and Other Hermès business lines (+57% over one year and +95% over two years), all contributed to the overall growth of the brand.

Looking forward to 2022, the impact of the ongoing pandemic remains uncertain. However, Hermès has set an ambitious goal for revenue growth at constant exchange rates in the medium term. The brand’s ability to adapt and thrive in the luxury market, as evidenced by its strong performance in the face of challenges, solidifies its position as a leader in the industry.

Useful links:
1. businessoffashion.com/education – Provides education and insights into the fashion and luxury industry.
2. voguebusiness.com – Offers news and analysis on the global fashion and luxury markets.