Hermes sales exceeded expectations thanks to strong demand for Birkin bags

French fashion house Hermes increased sales in a key pre-New Year's quarter for luxury manufacturers thanks to sustained demand for its iconic Birkin bags and other products. One of the most stable players in the luxury industry recorded growth in all markets and across most product categories.

Sales of Hermes goods, known for Birkin bags priced from $10 thousand per piece, rose by 9.8% to €4.1 billion in the fourth quarter of 2025, according to the fashion house's statements published on February 12. Analysts on average expected the figure to grow by 8.4%, Reuters reported citing Visible Alpha data.

Hermes' annual operating profit from core business - €6.57 billion or $7.79 billion - also exceeded forecasts. All Hermes divisions reported better-than-expected results in the reporting quarter, with the exception of the perfume and cosmetics business, where revenue fell by almost 15%, Bloomberg reports.

Hermes shares jumped more than 3% at the opening of trading in Paris on February 12. Subsequently, the growth corrected, at the time of publication, the securities of the fashion house traded in plus by a little more than 1%. A day earlier, the securities ended trading at about the level of the beginning of 2026 and cost €2120 per piece.

Price increases for Hermes' affluent clients in 2026 will be key to the company's growth prospects, said Chiara Battistini, luxury equity market analyst at JPMorgan Chase. Hermes CEO Axel Dumas told a conference call that the fashion house has raised prices by an average of 5-6% since the start of 2026. At the same time, many of its competitors have not rewritten their price tags, fearing a drop in sales, Reuters notes.

"We do not expect a material change in consensus forecasts for 2026 following these [Hermes] results, which we view as confident in the context of dynamic market conditions," Investing.com quoted RBC Capital Markets analyst Piral Dadhania as saying.

Brands that combine strong pricing, craftsmanship and quality storytelling - such as Hermes - remain best positioned to stay ahead of the competition in the current challenging environment, The Wall Street Journal quotes Vontobel analysts Jean-Philippe Bertschi and Manuel Lang as saying. Hermes is overcoming the slowdown in luxury demand more successfully than most other players thanks to a business model built on supply constraints, which helps maintain the brand's appeal, WSJ writes.

According to FactSet, analysts' views on Hermes have remained positive over the past month, despite a decline in the total number of recommendations. The number of recommendations to buy shares (Buy and Overweight ratings) decreased from 11 to 9, and to hold (Hold) - from 12 to 10. Only one expert (Underweight) considers it necessary to sell securities, as well as a month ago. The consensus on shares of the fashion house remains at the level "above the market" (Overweight, corresponds to the recommendation to buy).

This article was AI-translated and verified by a human editor