Having risen more than 300% over the past five years, Hermes’ (RMS:EPA) shares were marked up another 3.5% to an all-time high of €2,912 in Paris after the high-end handbag-maker defied the depressed luxury goods market by delivering forecast-beating fourth-quarter sales.

Revenue rose across the board in the quarter to December as luxury shoppers continued to splash out on the French company’s coveted handbags, which include the iconic Birkin, demonstrating the brand’s superior resilience to spending pressures.

Hermes’ better-than-expected sales and confident outlook statement were enough to ignite a rally across the luxury sector.

Shares in Burberry (BRBY), Richemont (CFR:SWX) and LVMH (MC:EPA) all moved higher on hopes wealthy individuals are back in spending mode.

SLOWDOWN, WHAT SLOWDOWN?

Hermes’ sales surged 17.6% higher to the best part of €4 billion in the quarter to 31 December, blowing past the 11% rise analysts had expected, with all geographical areas delivering ‘solid’ growth.

Despite the depressed global market for luxury goods, revenue was up by at least double-digit percentage in every major region save for Asia Pacific excluding Japan, where 8.9% growth still topped estimates.

Management highlighted a ‘strong’ performance in the Americas, where sales rose 22.3%, while the brand also sparkled in Japan, where revenue ticked up 22.4% in the final quarter.

QUALITY, CREATIVITY, SAVOIR-FAIRE

For full-year 2024, Hermes’ recurring operating income came in at €6.2 billion, a smidge above analysts’ expectations, as revenue surged 15% higher to €15.2 billion, and the luxury leader also delivered an 18% improvement in adjusted free cash flow to €3.8 billion.

Chairman Axel Dumas commented: ‘In 2024, in a more uncertain economic and geopolitical context, the solid performance of the results attests to the strength of the Hermes model and the agility of the house’s teams. While preserving the group’s major balances and its responsibility as an employer, the house is staying the course, attached more than ever to its fundamental values of quality, creativity and savoir-faire.’

Since Hermes’ products appeal to the wealthiest consumers, whose spending tends to hold up better during a downturn, the company has been able to outperform competitors such as Louis Vuitton-to-Dior owner LVMH and Gucci-owner Kering (KER:EPA), and enjoys strong pricing power and waiting lists for its coveted Birkin handbags.

Hermes also issued an upbeat outlook statement: ‘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,’ said the Paris-based firm.

‘In a more complex economic and geopolitical context, the group has moved into 2025 with confidence, thanks to the highly integrated artisanal model, the balanced distribution network, the creativity of collections and the loyalty of clients.’

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