Hermès’s Lust-Worthy Results Demonstrated The Sheer Might Of Luxury

Hermès’s Lust-Worthy Results Demonstrated The Sheer Might Of Luxury
Paul Allison, CFA

24 days ago2 mins

Mentioned in story

What’s going on here?

Hermès delivered lust-worthy results on Friday, even while leaving most of the luxury brand’s waiting list empty-handed.

What does this mean?

Hermès’s signature bags have graced the forearms of movie stars for decades. So with the power to bestow timeless style through rare exotic leather, the Paris-based brand has no shortage of fashion fanatics willing to devote some $20,000 to the cause. Thing is, Hermès’s limited-edition runs mean anyone willing to forfeit a mortgage for accessories joins a guarantee-free waiting list. So Hermès has been able to make the luxe bags and scarves more expensive, confident that shoppers will pay up when status and bragging rights are on the line. And pay up, they did: sales were a more-than-expected 18% richer last quarter from the same time the year before. Hermès returned the favor by granting investors a one-time $10 dividend, enough to afford a small piece of wrapping paper from one of the chic stores.

Why should I care?

Zooming out: Hermès is always in Vogue.

Hermès is in an enviable position – and we’re not talking about the beautiful streets of Paris. Realistically, any rich competitor with the right connections could rival the firm’s craftsmanship. They won’t have the Hermès name tag, though, which carries nearly 200 years of pedigree. So unless the height of fashion falls out of fashion, the world’s richest will want a piece (or three) of that heritage. No wonder Hermès’s stock commands a price almost as punchy as its Birkins, especially after scrubbing up by 15% this year.

Hermes stock
Source: Google Finance

For markets: Your mascara’s running.

Mind you, not every high-end brand has the prestige of Hermès. Cosmetics companies like Estée Lauder and L’Oreal usually lean heavily on the luxury-loving Chinese market to bring home the guanciale. So now that the country’s shoppers are on drugstore budgets, wary of the second-biggest economy’s financial problems, L’Oreal was forced to report less-than-desirable quarterly results on Thursday.

Hermes surpasses L’Oreal
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