Hermès crossed the €300 billion (HK$2.45 trillion) level in market value on Friday, allowing the maker of the famed Birkin bag to inch closer to its luxury industry arch-rival LVMH.
Shares of Hermès International SCA hit a record after it posted estimate-beating results in the fourth quarter, valuing it at about €307 billion as of 9:24 a.m in Paris. The move comes less than two years after the company surpassed the €200 billion mark in April 2023.
The surge is allowing Hermès to narrow the gap with the French benchmark CAC40 index’s biggest company LVMH Moët Hennessy Louis Vuitton SE. The owner of the Christian Dior label, which tried but failed to buy Hermès more than 14 years ago, is now valued at about €358 billion. Hermès is also putting greater distance between itself and such industry heavyweights as plane maker Airbus SE and energy group TotalEnergies SE — both with market capitalizations that are less than half that of the purveyor of handbags and scarves.
The rally once again highlights the outsize role the luxury sector plays in the French market. Additionally, it showcases the relative share performance of the two companies: Hermès’ market value has soared to about 86 percent of LVMH’s, although it has less than one-fifth the revenue of its rival.
For Hermès, a loyal and wealthy customer base that’s still splurging on its very exclusive leather purses and fragrances has kept it going strong while other labels like Burberry Group Plc or Kering SA’s Gucci have struggled amid turnarounds. Even LVMH’s Dior has shown signs of weakness after hiking prices too rapidly in recent years.
A finely calibrated sense of exclusivity and managed scarcity have converged into a winning strategy for Hermès. The supply-constrained business model has ensured that demand for its coveted handbags like the Birkin — named after the late British singer-actress Jane Birkin — and the Kelly — inspired by Princess Grace Kelly — outstrips what’s on offer. Founded as a harness-maker in 1837, Hermès enjoys strong pricing power and waiting lists for its products.
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Handbags and accessories at an Hermès luxury boutique in Paris. Bloomberg
