Hermès International announced an extraordinary 23 percent revenue jump in their Q1. This accomplishment only proves to solidify its claim to the title of the world’s largest luxury company by market capitalization. Today, U.S. importers are suffering under a tide of increased canceled sailings on cargo vessels departing from China. The cause of their writedown is tied to lower orders caused by former President Donald Trump’s tariff policies. During this whirlwind of change, Hermès’ market capitalization quadrupled, jumping to €249.5 billion. It made the jump above LVMH Moët Hennessy Louis Vuitton, which noted that its market cap was still at €242.7 billion.
In the first quarter, Hermès achieved a revenue rise of 7% year-on-year on a constant currency basis, totaling €4.1 billion. This figure fell just short of the Citi analysts’ consensus figure of 7.6%. While this may seem like a significant drop, it’s evidence of the brand’s continued health in a tough market. The luxury house’s core leather goods and saddlery division posted double-digit strong growth at 10%, as other sectors struggled to perform. In particular, Hermès’ watch sales crashed by 10%, and its perfume and beauty line stayed even during this quarter.
“In the medium-term, despite the economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates,” stated a spokesperson from Hermès.
Meanwhile, LVMH experienced an unexpected sales decline for the same quarter, raising questions about its performance amidst shifting consumer preferences and market conditions. The diverging outcomes have raised the heat on the luxury sector as it finds its way through these choppy waters.
An unexpected increase in canceled sailings from China is hitting U.S. importers hard. Second, this increase is largely a function of a drop in orders, which is the result of the tariff policies rolled out under Donald Trump’s administration. This change in trade pattern would be consequential for several sectors that depend on imported materials.
While the new developments are playing out, Siemens Energy has become a big part of the economic story, as both Wall Street and Main Street respond. The firm pointed to NextEra’s spectacular share rally through 2024, fueled by optimism for growing electricity demand. Siemens Energy just raised its fiscal 2025 outlook for the second time recently, now expecting comparable revenue growth of 13% to 15%. This optimistic outlook chimes with overall trends in the continent’s energy use and infrastructure build-out.
Investors look forward to the European Central Bank’s interest rate pronouncement, with expectations widely held for another reduction – a third in as many meetings this year. The ECB’s changes will undoubtedly have an effect on overall market conditions and consumer/business confidence across the continent, making the environment even tougher for luxury goods sellers.