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These last few months of health crisis have been a sign of decline for the luxury world. But one luxury brand has managed to slip through the cracks: Hermès. Since the beginning of the year, Hermès has recorded a stock market increase of nearly 40%.
The first half of the luxury giant is marked by a 38% increase in sales at current exchange rates to 2.1 billion euros, but especially by an explosion of sales in Asia and a 23% increase in America. These percentages more than compensate for the 9% decline in France due to the confinement.
According to Eric Lewin, a journalist and advisor to a Small Caps fund at CFD Asset Management, the success achieved by Hermès is due to its pricing power, i.e. the power to increase its prices without a drop in demand. And for good reason: the brand’s customers are not opposed to a few percent increase in the price of an item.
Like some other specialist brands in the luxury sector, such as Patek Philippe, Hermès is considered by some to be the symbol of ultra luxury. The French group was able to increase its sales prices during the health crisis.
At the end of 2020, Hermès had a cash flow of 995 million euros, despite 448 million euros in operating investments. This allowed the ultra-luxury brand to post a decline of only 6% in annual sales in 2020, and 7% in the first quarter of the same year. A year that has been fatal for other similar brands.
For comparison, Kering has suffered the effects of the health crisis. The group of the Pinault family recorded a 16.4% decline in sales in the first quarter, or about 3.2 billion euros. A decline that is explained by the loss of Chinese customers, which has impacted the entire group. Gucci is a perfect example, since Kering’s flagship brand has experienced a decline of 23% over this period.
It is the economic and financial strength that Hermès has managed to withstand this health crisis. The group has maintained its strategic investments, its production capacity and its distribution network.
Hermès also committed to paying a 1,250 euro bonus to all employees for their commitment and contribution to its unexpected results in the midst of a global pandemic.
Read Also > HERMÈS SALES UP 44% THANKS TO STRONG DEMAND IN ASIA
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These last few months of health crisis have been a sign of decline for the luxury world. But one luxury brand has managed to slip through the cracks: Hermès. Since the beginning of the year, Hermès has recorded a stock market increase of nearly 40%.
The first half of the luxury giant is marked by a 38% increase in sales at current exchange rates to 2.1 billion euros, but especially by an explosion of sales in Asia and a 23% increase in America. These percentages more than compensate for the 9% decline in France due to the confinement.
According to Eric Lewin, a journalist and advisor to a Small Caps fund at CFD Asset Management, the success achieved by Hermès is due to its pricing power, i.e. the power to increase its prices without a drop in demand. And for good reason: the brand’s customers are not opposed to a few percent increase in the price of an item.
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These last few months of health crisis have been a sign of decline for the luxury world. But one luxury brand has managed to slip through the cracks: Hermès. Since the beginning of the year, Hermès has recorded a stock market increase of nearly 40%.
The first half of the luxury giant is marked by a 38% increase in sales at current exchange rates to 2.1 billion euros, but especially by an explosion of sales in Asia and a 23% increase in America. These percentages more than compensate for the 9% decline in France due to the confinement.
According to Eric Lewin, a journalist and advisor to a Small Caps fund at CFD Asset Management, the success achieved by Hermès is due to its pricing power, i.e. the power to increase its prices without a drop in demand. And for good reason: the brand’s customers are not opposed to a few percent increase in the price of an item.
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