Does Hermès have the potential to overtake rival Louis Vuitton in terms of revenue? According to Citigroup analysts, overtaking is possible: the Faubourg-Saint-Honoré maison would in fact have all it takes to become the largest brand in the luxury sector within three years.
The US banking giant predicts that the house that produces the Birkin and Kelly bags is destined to reach 20 billion euros in revenues (21.3 billion dollars) by 2027 or earlier. A milestone that LVMH’s flagship brand achieved in 2022, while Hermès generated a turnover of 13.4 billion euros in 2023.
According to Thomas Chauvet of Citi, the gap is destined to close as soon as possible, also because Hermès would be better structured to gain new market shares compared to its competitors. “Hermès enjoys one of the most predictable growth, margin and cash flow profiles in the luxury sector,” Chauvet said.
The analyst highlighted how control over distribution and growth opportunities in categories beyond leather, such as ready-to-wear, watches, jewelry and tableware are the aces up the sleeve of the fashion house born as a saddlery in 1837.
Despite current fears of a slowdown in demand, Hermès shares have outperformed other luxury stocks with a 20% gain in the first few months of this year. A figure significantly higher than that recorded by the sector in the same period (+6.8%), while LVMH increased by 8.2%.
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