Hermes International SA has delivered another resilient performance against a backdrop of cooling demand across the broader luxury sector, benefiting from its ultra-high-net-worth clientele—who are less sensitive to inflation and macroeconomic fluctuations—and a lengthy order backlog.
On February 12, the French luxury giant released its financial results for the fourth quarter and full year of 2025. The company's Q4 revenue grew 9.8% at constant exchange rates, not only sustaining a stable growth rate but also surpassing the consensus analyst expectation of 8.4% compiled by Visible Alpha.
Regionally, the Americas, primarily the United States, stood out as the brightest spot. Sales in the region surged 12.1% at constant exchange rates in the fourth quarter, significantly exceeding market expectations for approximately 9% growth. Demand in Japan also remained robust, continuing to underpin the group's resilient global expansion.
In terms of product segments, the Leather Goods and Saddlery division, which is the primary profit driver and includes core categories like Birkin and Kelly bags, posted organic growth of 14.6%. This growth rate once again outpaced the group's average, demonstrating the defensive nature of its "scarce supply and strong brand power" business model during an industry slowdown.
Profitability continued to improve. The company's full-year operating profit reached 6.57 billion euros (approximately $7.79 billion), with an operating margin of 41%, slightly higher than the market's expectation of 40%. Concurrently, Hermes announced a dividend distribution of 18 euros per share. Management expressed confidence heading into 2026, although the price increase for the current year is projected to moderate to 5%-6%, down from the 6%-7% increase implemented in 2025.
The most critical takeaway from this earnings report is that, amidst an environment where peers are generally facing weaker demand and shrinking room for price hikes, Hermes managed to achieve near double-digit growth in the fourth quarter, exceeding expectations.
For the full year, the operating profit of 6.57 billion euros and a 41% margin, slightly above the expected 40%, contrast with many luxury brands grappling with pressures from discounting, channel adjustments, and marketing investments. Hermes's better-than-expected margin appears to be a natural outcome of its business model, characterized by scarce supply, strong brand equity, and a product mix skewed towards the high end.
The 12.1% sales growth in the Americas was a positive surprise in the report, indicating that purchasing power for top-tier luxury goods remains intact in this key consumer market. For investors, the significance of this data point lies in the fact that when mid-to-high-end consumption wavers, the ability of leading brands to maintain momentum in the U.S. often sets the floor for full-year growth.
The Leather Goods and Saddlery division serves as the profit anchor for Hermes and is the category where brand scarcity and pricing power are most concentrated. The division's 14.6% organic growth this quarter, significantly faster than the group average, indicates that core items like high-end handbags remain in high demand with a stable pricing and allocation system.
CEO Axel Dumas stated that price increases for this year are expected to be around 5%-6%, a slowdown from the 6%-7% seen in 2025, partly attributing the change to currency fluctuations. While Hermes is also moderating its price hike cadence, it maintains a relatively clear annual price increase plan, reflecting confidence in its customers' purchasing power and brand premium.
Looking ahead to 2026, market focus will center on three key areas: 1. Whether the high growth in the Americas can be sustained, particularly given marginal changes in the U.S. macroeconomic environment and high-end consumption. 2. The implementation effect of the 5%-6% price increase across different regions and product categories, and whether it will impact sales volumes or waiting lists. 3. How Hermes balances production expansion with scarcity management against a backdrop of long order backlogs, continuing to translate "supply rhythm" into long-term pricing power.