Q3 Revenue, Double-Digit Growth
LVMH and Chanel Shrink Amid Recession
Herm?s, known as the "luxury above luxury," saw its third-quarter sales increase by more than 10% compared to last year. This contrasts with other luxury brands such as Louis Vuitton and Gucci, which are experiencing sluggish performance.
The price of the Birkin bag, presumed to be held by Yahya Sinwar's wife, released by the Israeli military. [Image source=Screenshot X]
On the 24th (local time), foreign media reported that Herm?s' third-quarter (July to September) sales reached 3.7 billion euros (approximately 5.5099 trillion KRW), marking an 11.3% increase compared to the same period last year (based on constant exchange rates). This growth matched analysts' expectations cited by global investment bank Jefferies. Notably, sales in Japan surged by 23%.
The results are particularly eye-catching amid a downturn in the luxury market. The luxury market, which grew rapidly during the pandemic, has significantly contracted due to the endemic phase and high inflation. Especially, the slowdown in China’s economy, a major consumer, has reduced demand for luxury goods such as handbags, causing key players like Louis Vuitton and Gucci to suffer from deteriorating performance. This decline is likely to be prolonged, prompting companies to aggressively downsize. Most are seeking survival strategies by securing funds through equity sales, workforce reductions, and scaling back non-core businesses.
Herm?s Dosan Park
Chanel is planning large-scale workforce reductions in its China operations. Some departments are considering layoffs of up to 50%, and hiring plans have been completely halted. French luxury conglomerate LVMH, which owns high-end brands such as Louis Vuitton, Dior, and Celine, is also implementing cost-cutting measures in anticipation of profit declines. At the end of September, it divested its stake in the streetwear brand Off-White, stepping away from lower-priority businesses.
In contrast, ultra-luxury brand Herm?s is growing alone in the struggling industry through classic designs and meticulous inventory management. Despite global economic and geopolitical uncertainties and exchange rate fluctuations, the company expects continued sales growth and plans to maintain hiring.
Herm?s’ signature ultra-luxury bag, the Birkin bag, recently made headlines as the wife of Hamas leader Shinwar, who recently passed away, reportedly took it with her while fleeing through tunnels to escape Israeli attacks. The bag she refused to give up during her escape is known to be worth $32,000 (approximately 44 million KRW).
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