Birkin bag demand sees Hermès profits soar to new heights: the luxury brand surpassed rivals LVMH and Cartier owner Richemont in the first half of 2023 with a sales jump thanks to the US and China

Aug 3 , 2023

Demand for the famous Hermès Birkin bag continues to rise in 2023. Photo: Handout

Hermès’ sales and profit jumped as the maker of Birkin bags stood out from its luxury industry rivals with unabated demand for its high-end purses, notably in the US and China.

Shoppers line up to visit a Hermès store in Shanghai, China, in May 2022. Photo: AP

First-half earnings and sales growth beat analysts’ estimates. Revenue in the Americas gained 21 per cent in the second quarter at constant exchange rates, almost double what analysts expected. The stock rose as much as 4.3 per cent in Paris.

Jamie Chua in Paris with an Hermès Birkin bag. Photo: @ec24m/Instagram

Hermès is outperforming rivals LVMH Moët Hennessy Louis Vuitton SE and Cartier owner Richemont, which have reported weaker demand in the US after strong spending on luxury goods in the past two years.

Hermès Himalaya niloticus crocodile Kelly 25 Retourne. Photo: Sotheby’s

Demand has stayed strong in all regions in July, executive chairman Axel Dumas told reporters in a call Friday, adding he’s confident for the rest of the year.

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“In difficult moments, there’s what we call in finance the flight to quality, so we’ve benefited from it,” Dumas said, adding, “I don’t want to jinx it.”

A model wears a creation as part of the Hermès autumn/winter 2023-24 ready-to-wear collection presented on March 4, in Paris. Photo: AP

Recurring operating profit advanced 28 per cent to €2.95 billion (US$3.24 billion) in the first half, and the margin reached a record 44 per cent.

Analysts consider Hermès to be in a category of its own as far as pricing power is concerned as demand for its handbags consistently surpasses its capacity to produce them. That means many bags enjoy higher resale values.

“Hermès blows the whole luxury goods industry out of the water,” wrote Luca Solca, an analyst at Bernstein.

Different colours and sizes of Hermès Birkin bags. Photo: Hermès

LVMH’s US revenue fell one per cent in the second quarter on an organic basis. The Americas growth at Hermès was helped by all divisions and mostly by higher volumes, Dumas said. Sales from the region that includes China also grew by a more than a third.

Dumas said historically profitability is stronger in the first half.

A guest wears a neon-pink shiny leather crocodile print pattern Birkin handbag from Hermès during Paris Fashion Week on January 25, in Paris, France. Photo: Getty Images

Hermès shares have outperformed its luxury rivals, jumping by around a third this year. The company saw its market capitalisation cross the symbolic €200 billion threshold earlier this year.

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English actress Jane Birkin died in 2023. Photo: Getty Images

Jane Birkin, the actress who was the muse for the bag model named after her, died earlier this month.

“She was a dear friend of the maison,” Dumas said earlier, describing her as an “open-minded” artist who happened to be close to his uncle Jean-Louis Dumas who once ran the company. After famously bumping into her once on a flight in the 1980s, Jean-Louis took on her design idea for a bag model, which went on to become one of the label’s most sought-after products.

An employee holding a US$129,000 crocodile-skin Hermès Birkin bag for the press to see, during a private opening for the new Hermès store on Wall Street, in 2007. Photo: AFP

The maker of Kelly bags, named after actress Grace Kelly, aims to open one new leather manufacturing facility per year in France in order to maintain a growth rate of about seven per cent for its leather goods.

The company said it has no plans to further boost product prices this year after January’s hike.

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Fashion

Hermès’ first-half earnings and sales growth beat analysts’ estimates this year, notably in the US and China, as demand for its bestsellers like the Birkin bag stay strong
Executive chairman Axel Dumas told reporters that he’s confident for the rest of 2023, with the news coming soon after the death of beloved actress and muse of the fashion house, Jane Birkin