Hermes is likely to surpass LVMH's flagship brand Louis Vuitton as the luxury industry's top earner in the near future, predict analysts at Citigroup Inc.
Dated April 12, Thomas Chauvet's note shows, Hermes' sales are likely expand to €20 billion ($21.3 billion) by 2027 or even earlier, a feat achieved by Louis Vuitton in 2022. In 2023, Hermes recorded group revenue of €13.4 billion.
Spanning from accessible to ultra-luxury ranges, Hermes' strategic pricing coupled with its tight control over distribution, positions it favorably for expansion across various categories including ready-to-wear, watches, jewelry, and tableware.
Despite concerns about a potential slowdown in demand for high-end goods post-pandemic, Hermes' shares have outperformed other luxury stocks with a 20 per cent increase year-to-date. In comparison, the industry gauge rose by only 6.8 per cent, while LVMH saw an 8.2 per cent uptick.
Centered on scarcity and catering to affluent clientele, Hermes' unique business model offers a level of insulation from industry downturns.
A conglomerate with 75 luxury brands spanning handbags to Champagne, LVMH remains the world's largest luxury group. According to HSBC analysts, Louis Vuitton alone contributes approximately 50 per cent to LVMH's profitability and accounts for 26 per cent of its total sales.
