With a record market value of more than $218 billion, Hermès is now the world’s second most valuable luxury company.
The French design house reportedly surpassed Swiss pharmaceutical company Novartis AG in market value earlier this week and now stands as the eighth most valuable company across Europe, in addition to placing second behind fashion conglomerate LVMH in the luxury market.
“In 2022, Hermès had an exceptional year thanks notably to the good performance of its international markets,” said CEO Axel Dumas, a descendant of founder Thierry Hermès who has led the company since 2014, in a statement accompanying its annual results.
Before joining Hermès as an auditor in 2003 and eventually holding positions as head of the company’s jewelry and leather goods divisions, Dumas worked as an investment banker for Paribas in Beijing, Paris and New York City.
LVMH, the parent company of brands such as Louis Vuitton and Fendi, is valued at around $458 billion, while its CEO Bernard Arnault is currently the world’s richest person with an estimated net worth of $194 billion, according to Bloomberg.
Hermès and LVMH have long been rivals, with Arnault acquiring 23 percent of Hermès shares by 2013 and prompting Dumas to convince his family members to pool their shares in a holding company. LVMH later agreed to relinquish the majority of its stakes, quelling concerns of a takeover bid.
Hermès, known for its leather handbags such as the sought-after Birkin bag, which ranges from $8,500 to $300,000, saw revenue increase by 29 percent in 2022 with around 11.6 billion euros ($12.6 billion) worth of sales, a record for the company, with all employees receiving an “exceptional bonus” of 4,000 euro ($4,360).
Why has Hermès seen such significant growth?
Much of the company’s recent growth is attributed to a rebound in demand for luxury goods in China after a series of pandemic-related lockdowns. In 2022, Hermès saw sales grow by 22 percent in Asia, excluding Japan.
“We have seen a strong situation in China with big progression, double digit growth over the last two years,” said Dumas during a February presentation of the company’s 2022 results. “We see this momentum and the attractiveness that Hermès represents.”
The luxury design house has also seen increasing demand for its products and has reportedly doubled its sales over the past decade despite operating from around the same amount of stores.
Hermès plans to increase its leather output by 7 percent through a newly opened leather goods facility in Normandy, France. The company also said it hopes to add one new facility annually, with workshops set to open in the French cities Sormonne and Riom by the end of 2024.
