There’s luxury, and then there’s Hermès luxury. Your Survival Guy’s boots-on-the-ground takeaway is that Hermès is always busy regardless of the economy. Andrea Figueras discusses Hermès upcoming results in The Wall Street Journal, writing:
Birkin bag maker Hermes is scheduled to report results for the third quarter on Thursday. Here is what to know.
SALES FORECAST: The French luxury company is expected to book quarterly revenue of 3.69 billion euros ($3.99 billion), according to a poll of estimates by 12 analysts compiled by Visible Alpha. In the prior-year period, the company booked revenue of 3.365 billion euros.
Shares in Hermes have jumped roughly 6.5% since the start of the year and are up about 22% over the past 12 months.
WHAT TO WATCH
–PRICING: One of the key areas of interest in the company’s third-quarter update will be the outlook on price increases, Deutsche Bank analysts said in a research note. “The Hermes business model, especially in its largest leather goods segment, has a supply-constrained offer which allows for much better control over pricing and margins than peers,” DB said. Strong pricing power and brand desirability, particularly for its Birkin and Kelly bags, has allowed Hermes to continue achieving growth, defying a wider slowdown in the luxury industry.
–HIGH-END CONSUMERS: Hermes has exposure to the wealthiest consumers in the market, a key factor insulating the sector’s best performers from waning demand for luxury goods as the richest shoppers continue to spend big. Brands that are more exposed to less affluent consumers have faced more challenges as these clients have reduced their spending on pricey goods due to the economic climate. Hermes is widely accepted as the highest-quality, most-differentiated luxury-goods company, Deutsche Bank analysts wrote.
Action Line: There is a reason many of the greatest luxury brands are centuries old. No matter the state of the economy, the wealthiest are always looking to buy the best. Click here to subscribe to my free monthly Survive & Thrive letter.
