Analysts at Citigroup Inc. predict that Hermès will overtake LVMH’s flagship Louis Vuitton in the near future to become the largest brand by turnover in the luxury market.
Thomas Chauvet predicted in a note dated 12th April that the company’s sales will reach the “symbolic” € 20 billion mark by 2027 or before. The Louis Vuitton fashion label achieved this milestone in 2022. In 2023, Hermès brought in € 13.4 billion for the group.
“Hermès enjoys one of the most predictable growth, margin and cashflow profiles in the luxury industry,” said Chauvet. The analyst emphasised the French company’s pricing strategy, which spans from reasonably priced to extremely luxurious, its command over distribution, and its potential for expansion into non-leather markets including ready-to-wear, watches, jewellery, and tableware.
Despite worries about a decline in high-end demand after a post-pandemic boom, Hermès’ shares have outperformed other luxury goods businesses this year, rising 20 per cent so far. LVMH has increased 8.2 per cent within the same period, while an industry measure has only increased 6.8 per cent.
Because of its exposure to extremely rich clientele and its distinctive, scarcity-driven business strategy, Hermès is thought to be more resilient to an industry slump. On 25th April, the business is scheduled to provide an update on first-quarter revenues.
The largest luxury conglomerate in the world, LVMH, has 75 brands that produce everything from handbags to champagne. According to HSBC analysts, Louis Vuitton alone contributes for 26 per cent of revenues and produces about 50 per cent of LVMH’s income.
