9 months ago • 2 mins
Hermès's results, out on Friday, showed that it wrapped up 2022 in vogue.
What does this mean?
Hermès might begin with a silent letter, but it ended last quarter with results that speak loud and clear. That’ll come as a relief to investors, who were probably expecting the worst: after all, the recent results of rivals LVMH and Kering were dulled by disruption in China. But somehow Hermès managed to escape that fate, with sales in the Asia-Pacific region growing by about 25% last quarter. A new flagship store helped stateside sales shine too, with demand for its jewelry, leather goods, and watches staying hot. In short, the French luxury group capped off the year in style, smashing through expectations for the quarter and the whole of 2022. And with the firm planning to up production of its iconic Birkin bags, Hermès’s future could be in the, ahem, bag.
Why should I care?
The bigger picture: Modish Middle Kingdom.
The US and Europe were the world’s top luxury consumers last year, but China's getting ready to overtake them: a recent report by PwC predicted that the country will account for a quarter of the global luxury market by 2025 – small wonder, with the nation reopening and its middle class getting ever richer. Luxury brands had already been flocking eastward, with more than half of 2021’s luxury store openings taking place in the People’s Republic – and now some brands are refreshing their designs and marketing campaigns in the hopes of making a buck from Chinese festivals too.
For markets: French finery.
Luxury stocks are a hot commodity these days, with some investors saying the sector's colossuses could replace Big Tech as the strongest growth stocks. And while that’s still only conjecture, one thing is for sure: LVMH, Kering, and Hermès have been major drivers of France's CAC 40 index this year – keeping it above the UK as Europe's most valuable stock market.
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