Hermes sales rose 16 per cent in Q4. The leather goods unit was the main driver behind the sales growth. Hermes, also known for silk scarves, joins LVMH in reporting better-than-expected results as luxury shoppers turn their attention to established premium brands including Louis Vuitton and Dior during the pandemic. Hermes has benefited from a strong customer base in European countries. For most luxury companies, the region has been the worst-performing amid a lack of Chinese tourists, shoppers who have helped drive growth at Gucci in the past decade. Fourth quarter revenue at Hermes rose about 39 per cent in Asia, on an adjusted basis, and shrank 9.7 per cent in Europe.
The luxury company isn’t seeing a change in behavior from Chinese shoppers compared to the last three months of 2020. The company also doesn’t plan major price increases this year, probably around one per cent, similar to last year. The company typically only raises prices to reflect the increase in input costs. Full-year recurring operating income fell 15 per cent. Hermes confirmed its superiority in 2020 with the reduction in tourist flows more than offset by a loyal customer base. Asia is showing promise for the brand.