Sales jump by 23% at Hermès as super-rich spend big
Firms open new factories to keep up with demand for ‘must-have’ Handbags
As a result of a 23% jump in sales in the first three months of the year, Hermès, maker of Birkin and Kelly bags worth more than £5,000, reported a 20 percent increase in sales. With wealthy shoppers spending big despite the living costs crisis, Hermès becomes the latest luxury goods company to benefit.
A very good Chinese new year in Asia drove “very dynamic traffic” to the company’s stores, with “a very good Chinese new year-driven traffic” in Asia, Italy, and the UK during the quarter, which helped lift overall quarterly sales to €3.4bn (£3bn).
A string of “artisan” factories were opened by the company to meet the strong demand for its leather handbags. The 25cm Kelly bag is made at its new facility in Louviers, Normandy, where 140 leather workers are employed. The company plans to double its workforce within four years.
Kelly bags, named after Grace Kelly, were renamed when she was photographed holding them over her belly during her pregnancy in the 1950s, and are made by a single leather worker who works between 13 and 20 hours per day.
A Paris-to-London flight in 1983, during which Hermès chief executive Jean-Louis Dumas sat next to the actor and singer Jane Birkin, gave the Birkin its name. She scrambled around to pick up the contents of her straw Travel bag after they fell out of the overhead bin while she was loading the plane.
It was difficult for her to find a leather bag spacious enough for everything a young mother needed to carry. She also received a personalized Birkin bag from Hermès a year later. To support tsunami relief efforts, she auctioned off her original, well-worn bag for $162,000 in 2011.
There are many celebrity collectors of the bags, including Victoria Beckham, Katie Holmes, Rita Ora, and Kelly Brook. In addition to the shocking pink Birkin worth £100,000, Beckham has more than 100 Birkins worth more than £1 million.
The sale of rare Hermès bags at auction has also been extremely successful, with some selling for almost $300,000.
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Furthermore, Sormonne, in the north-east, and Riom, in the center of France, are in the process of being built by the company. In order to increase leather goods production by 7%, these factories are expected to open next year.
According to Hermès CEO, Axel Dumas, the brand’s factories are taking time to begin production due to the removal of its most talented leather workers for training younger staff. During the opening of Louvers’ factory, he said, “Training requires time.”. After they have been trained, our best artisans become trainers.
As part of its endeavor to train more craftspeople in the making of Handbags, the company also opened a leather-working school. There are now more than 450 people enrolled in leather goods apprenticeship programmers throughout France through the Hermès school of craftsmanship, which has been certified by the French ministry of education.
In the first half of the year, Hermès hired more than 200 new employees.
Its share price has jumped more than 50% this year to €1,963, after being founded in 1837 by horse harness and saddle maker Thierry Hermès. The company is now valued at more than €200 billion. In recognition of its success, it gave bonuses to all 19,700 employees earlier this year.
Axel Dumas, a sixth-generation member of the Hermès family, remains the majority owner of Hermès. According to the Bloomberg billionaires index, the Dumas family’s fortune is estimated at about $96 billion (£77 billion). Artistically, the company is directed by his cousin Pierre-Alexis Dumas.
According to Bernstein analyst Luca Solace, Hermes managed to turn around adverse trends by leveraging its high brand desirability and iconic product waiting lists.
According to him, richer consumers are likely to benefit from high-end exposure.”
It has been reported that LVMH, the luxury goods empire of the world’s richest person, Bernard Arnaut, has grown its first quarter sales by 17% to €21 billion.
A record high of €890 was reached for the shares of the company, which owns Louis Vuitton, Christian Dior, and Mot & Chandan champagne. The company’s value stands at €447 billion. As a result, it has become the 10th most valuable company in the world and the most valuable company in Europe.