Some of the big players in fashion in recent weeks, like Gucci owner Kering, are having a bit of a hangover after years of pandemic-era luxury aspirational shopping. Others, like Dior parent LVMH, are keeping the party going as Chinese buyers ramp up spending after their government’s covid restrictions began to lift. But for the French label Hermès, the feeling is one of everlasting bliss. The company reported Friday (Feb. 9) that revenues grew more than 20% last year to $13.4 billion (pdf).
“Hermès has once again cultivated its singularity and achieved an outstanding performance in all métiers and across all regions against a high base,” executive chairman Axel Dumas said in a statement accompanying the numbers.
Birkin baiters
The reason for the brand’s impressive growth is that its customers tend to be so rich, the words “economic uncertainty” don’t exactly put a bridle on their spending. The only category that didn’t grow by double-digits was “other products,” the stat line where it stashes the production work it does for other companies—the shoemaker John Lobb, the crystal manufacturer Saint-Louis, and the silver house Puiforcat.
The company’s most famous product is its Birkin bag, the five-figure accessory Samantha Jones was willing to get fired by Lucy Liu to acquire on Sex and the City. The purse is so coveted and so limited that there’s a culture of so-called “Birkin bait” spending, where customers buy lots of Hermès products to bribe their way into the chance—yes, chance—to purchase one. The company knows these customers are its lifeblood, and it goes to great lengths to keep them around and happy.
One analyst during the earnings presentation asked whether the company felt good about the robustness of its results given the state of the competition. Dumas demurred on talking down his rivals, but he did note that Hermès places much more of its communications strategy on retaining the attentions of its current customer base instead of acquiring new ones.
“What is specific with Hermès compared to other players is that we invest a lot in client events and much less in press and media events,” he said, dubbed over by a translator. “We do the opposite of what other players in the industry do. Our main communication channel is the client or customer event…We don’t have a lot of money and press to drive up our revenue, unlike others.”