Another record quarter for the most successful company on the French stock exchange.
Sales up 12.6% on the same period last year, with double-digit growth in all geographical segments. The Group’s two main business segments – leather goods and saddlery, and apparel – still account for two-thirds of sales.
There’s no stopping Hermès, whose sales have tripled and profits quintupled over the last decade. Characteristic of true luxury – the kind that lasts and thrives when fads come and go: instead of discouraging demand, successive price hikes have only stimulated it.
Over the long term, i.e. the last twenty years, it is remarkable to note that Hermès’ valuation has evolved around an average of forty-five times profits. This has not prevented its share price from increasing thirty-fold over the period, not even counting dividends.
This is a lesson that Kering shareholders will no doubt ponder with a touch of bitterness. The group headed by François-Henri Pinault had pulled off a veritable hold-up with Gucci’s breakthrough in Asia, and many were betting on a valuation alignment with King Hermès.
This was an overestimate of the former, and an underestimate of the latter. In his case, the returns on capital invested over the entire cycle are truly astounding. In this respect, readers who often ask us about the meaning of value creation have here a convincing example, and a perfect antithesis to another fallen king who also published his quarterly results yesterday.