By Mimosa Spencer
PARIS (Reuters) -Birkin bag maker Hermes said it will raise prices again this year after sales jumped 17.5% in the fourth quarter of 2023, demonstrating the resilience of high end shoppers despite economic headwinds.
Sales for the three months to the end of December totalled 3.36 billion euros ($3.62 billion), up 17.5% at constant foreign exchange rates. That was ahead of expectations for 14% growth, according to Visible Alpha consensus estimates.
The company plans to lift prices by between 8% and 9% this year globally, executive chairman Axel Dumas told reporters on Friday.
Hermes raised prices by around 7% globally last year to account for higher production costs, with the exception of the U.S., where increases were around 3%, and Japan, where they were in the double digits due to currency fluctuations.
One of the most consistent performers in the luxury goods industry, Hermes has a track record of outpacing rivals when economic conditions deteriorate, thanks to its classic designs and careful management of production and stocks, which helps maintain the label’s aura of exclusivity.
Handbags like the coveted $10,000 plus Birkin model are affordable only for the wealthiest shoppers — who are typically the more immune to choppy economic conditions.
Bernstein analyst Luca Solca said the performance amounted to a “solid beat” confirming Hermes “strong brand momentum.”
The French luxury label clocked strong growth in all regions, and flagged “dynamic” growth in China.
“There has been no interruption in trends,” Dumas said, noting that while he noticed lower mall traffic in China during his last trip to the country over the fourth quarter “that’s not reflected in our figures.”
Hermes will pay a 4,000 euro bonus to each of its over 22,000 employees worldwide, the company said.
($1 = 0.9283 euros)
(Reporting by Mimosa Spencer; Editing by Matt Scuffham)
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