Let’s begin my deep dive with an understanding of who Hermès International is today. 

Tomorrow, I’ll go a little bit more into the company’s origins. For those who don’t follow luxury brands closely, here’s why you should pay attention to Hermès, particularly if you’re an emerging premium to luxury brand.

The Art of Luxury: A Closer Look at Hermès International

Hermès is a celebrated French luxury goods company built on a distinguished heritage, exceptional craftsmanship, meticulous attention to detail and unwavering commitment to quality at every stage of production. If you’ve followed me long enough, you know these are also my non-negotiables when defining a brand as luxury.  Note exclusivity and price are not part of the equation. But as I said in my Monday Musings this week, exclusivity and price are consequences of these luxury pillars and not definitions.

Distinct from some of its main competitors like LVMH, Richemont, and Kering, Hermès primarily focuses on its singular brand, offering a diverse range of products including leather goods, lifestyle accessories, home furnishings, fragrances, watches, jewelry, fashion apparel, and equestrian equipment, all under the Hermès name.  

The leather goods and saddlery segment are the largest contributor to Hermès revenue, accounting for about half of the company’s total income. This is followed by the ready-to-wear and accessories division, which contributes around 27%, with the silk and textiles sector making up about 9%. Perfume and beauty, watches and other products make up approximately 11%.

Hermès recently became the world’s second most valuable luxury brand, now only behind LVMH. For those who don’t know the history between LVMH and Hermès, I’ll be touching on this in an upcoming post. It was actually LVMH – and its attempted hostile takeover over Hermès – that put the company on my radar when I wrote my last deep dive over a decade ago.

Let’s just say Hermès was none too pleased with Bernard Arnault, LVMH’s notorious CEO’s, antics.  If I may quote then Hermès CEO, Patrick Thomas, in how he regarded Arnault’s attempt, “If you want to seduce a beautiful woman, you don’t start by raping her from behind.”

It was certainly an entertaining duel to watch last decade between two French companies and their colorful characterizations!

But for now, Hermès’ market value has surpassed $218 billion. The brand experienced a significant rally in 2023, soaring by approximately 30%. This was largely driven by strong investor confidence and a robust demand recovery in luxury markets, especially post-pandemic China.  The brand has continued to strengthen its presence globally, including opening new stores and expanding existing ones in key markets like Naples, Florida, and Nanjing, China.

Hermès is now the eighth most valuable company in the pan-European Stoxx 600 index. This milestone highlights the brand’s exceptional pricing power and the resilience of luxury brands in economic uncertainties.

Clearly, Arnault wasn’t wrong in his prognostication that Hermès would be a powerful brand to have in his portfolio.  But as I mentioned in my last deep dive, Arnault owning Hermès would have been the death of a company that truly encapsulates the very definition of luxury.  

Now, before someone chastises me for not recognizing that LVMH brands are all considered the epitome of luxury, I’d recommend doing a deep dive into LVMH manufacturing, sourcing and materials and compare it to what I will share in a coming post about how Hermès approaches these categories.

There’s smoke and mirrors, and then there’s the real thing.

I know. I’ve offended someone! Je suis vraiment désolé!

Please, don’t get me wrong. Arnault is a brilliant businessman. And as the second richest man in the world, he clearly knows what he’s doing.  I would never deny the luxury status of every single brand in the LVMH portfolio.

But given craftsmanship is one of my biggest qualifiers in defining luxury, a Louis Vuitton bag does not compare to one made by Hermès.

Does this make a Louis Vuitton bag in my eyes not luxury? Absolutely not. LVMH has done an incredible job of meeting my ultimate qualifier for luxury – the emotional resonance it has with the luxury consumer. I credit this to their incredible marketing campaigns and their phenomenal customer service.

Personally, for me, however, an Hermès bag – with its obsessive attention to every little detail — is worth the price.  I can’t as easily say that of a Louis Vuitton bag.

Key Takeaways for Hermès International

1. Heritage of Excellence: Hermès is a celebrated French luxury goods company known for its distinguished heritage, exceptional craftsmanship, and unwavering commitment to quality.
2. Singular Brand, Diverse Luxury: Unlike some of its competitors, Hermès primarily focuses on its singular brand and offers a diverse range of luxury products, including leather goods, lifestyle accessories, home furnishings, fragrances, watches, jewelry, fashion apparel, and equestrian equipment.
3. Revenue Contributors: The leather goods and saddlery segment are the largest contributors to Hermès’ revenue, followed by the ready-to-wear and accessories division, silk and textiles sector, and other products.
4. Remarkable Growth and Value:Hermès has recently become the world’s second most valuable luxury brand, behind LVMH, and its market value has surpassed $218 billion, with significant growth driven by strong investor confidence and a post-pandemic demand recovery, particularly in China.
5. Unwavering Brand Identity: Despite the attempted hostile takeover by LVMH in the past, Hermès has maintained its unique brand identity and values, emphasizing craftsmanship and quality as the essence of luxury.