Hermès officially passed LVMH too, to become the world’s largest luxury firm by market cap. This achievement is no small feat especially considering the cutthroat nature of the luxury goods industry. The French couture maison is an international household name thanks to its luxurious Birkin and Kelly bags, plus its colorful scarves. In the first quarter of the year, they announced a stellar 11% same-store sales growth in their Americas division. This area now represents close to all of Hermès’ sales revenue.
Despite this remarkable growth, Hermès’ annual revenue remains less than a fifth of LVMH’s, a testament to the latter’s expansive portfolio of luxury brands. Hermès’s success story underlines how much strength and power the brand is flexing in the market. With a current valuation of 244.5 billion euros ($278.2 billion), it is now just behind LVMH’s valuation of 245.7 billion euros.
Hermès has been proactively responding to the changing economy and U.S. tariff policies. It plans to increase prices in the United States, starting May 1. His successor, President Donald Trump, went even further by imposing a universal 10% tariff. In counterpoint, we’ve seen several luxury brands already beginning to rethink their aggressive markdown strategies.
Hermès’ finance chief, Eric du Halgouët, stated the company aims to “fully offset” the impact of these tariffs while maintaining its market position. In his comments, he underlined Hermès’ exceptional business resilience. Even with headwinds in watch and fragrance sales, the bottom line remains “robust.”
“fully offset” – Eric du Halgouët, Hermès’ executive vice president for finance
This increase will be targeted to the tariffs that were included in the White House’s decision to raise tariffs in early April. In response to our queries, Hermès reiterated that there will be no raise in their prices in the U.S. This decision comes in the face of a threatened 20% EU tariff.
In reaction, news of the pending increases drove Hermès’ shares slightly lower. As of Thursday morning trading, they have dropped down 1.3%. As luxury brands navigate the complexities of tariffs and changing economic conditions, Hermès’ proactive approach reflects its commitment to maintaining profitability and market leadership.