Well-heeled shoppers have returned to their favourite designer labels and boutiques with fresh exuberance and spending power after the Covid-19 outbreak.
Hermes, known for its $12,000-plus Birkin bags, belts, handbags, jewellery and homewares, has been swept up in a spending splurge on luxury fashion and apparel around the world, which has promoted sales of other luxury brands such as Louis Vuitton despite widespread economic challenges.
Hermes last year lifted prices, reportedly by 7 to 10 per cent to counter inflationary pressures within its businesses, with high-income consumers still happy to fill their homes and wardrobes with boutique items.
Australia seems to be no exception as local shoppers with expensive tastes – and the bank balances to match – have helped push Hermes here to double its sales since 2020 and more than double its profits within the same period.
According to the latest financial accounts lodged with the corporate regulator by Hermes Australia – the local offshoot of the French fashion house founded in Paris in 1837 – its revenue in calendar year 2022 hit $388.274m, up from $297.839m. This is against sales of $207.28m in 2020, and representing a total gain of 87 per cent.
The recent grand opening of Hermes new store in Madison Avenue, New York City. Picture: Vincent Tullo
Much of this looks to have dropped through to the bottom line with Hermes enjoying jaw-dropping margins on the sale of its super-luxury goods, led by items such as its $47,130 racing handbag, $11,380 Galop d’Hermes watch, $750 silk scarf or $340 men’s tie.
According to the accounts Hermes Australia’s pre-tax profit was $126.4m in 2022 and net profit was $87.37m. This was up strongly from net profit of $60.789m in 2021 and profit of $40.88m in 2020. Since 2020 and the outbreak of the pandemic, Hermes Australia profit has leapt 113 per cent.
Hermes only has six stores in Australia.
The long-time boss of Hermes Australia, Karin Upton Baker, has run the French fashion and apparel business here for more than 22 years. She did not return phone calls when contacted. Hermes Australia’s strong sales trajectory reflected built-up demand for its luxury line of clothing, apparel, fashion accessories and homewares and came despite Hermes lifting its prices as much as 10 per cent in some regions in the wake of inflationary pressures.
The Hermes store on Melbourne’s Collins Street. Picture: NCA NewsWire / David Crosling
Australia is increasingly capturing the attention of Hermes executives at its Paris headquarters. The region was recently called out by French billionaire Axel Dumas, who is part of the sixth generation of the Hermes family and currently executive chairman of the company.
He singled out Australia when discussing the strong 23 per cent growth in quarterly sales for Hermes in the Asian region, excluding Japan.
He said the result was driven by a very good Chinese New Year, and pursuing its strong momentum in Greater China and across the region, particularly in Singapore, Thailand, and Australia.
“The first quarter of 2023 is aligned with the good results of 2022 and reflects the success met by our collections all over the world, driven by the loyalty of our customers. We are proud to strengthen our production capacities and consolidate our artisanal model,” Mr Dumas said.
Demand for luxury goods has spilt into calendar 2023, with Hermes reporting sales lifted 23 per cent to €3.3bn ($5.38bn) in the first three months of 2023.