18 April 2024

Luxury - Product scarcity strategy suits Hermès

Image shows business management students visiting a Hermès store in Cannes.

Analyst at Citigroup and seasoned commentator on the luxury sector Thomas Chauvet has said that Hermès is on course to take its annual revenues from €13.4 billion in 2023 to more than €20 billion in 2027. By Leatherbiz.

He pointed out in a note that the Louis Vuitton brand, the flagship brand of larger group LVMH, had gone past the €20 billion milestone in 2022. But he said that Hermès could even overtake Louis Vuitton in the years ahead.

His analysis of share-price increases so far this year reveals an average for the luxury sector of 6.8%. The increase at LVMH is ahead of this at 8%, but over the same period Hermès’s share price has gained 20%.

He said that Hermès’s business model was driven by scarcity and that this helped set the group apart.

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