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Hermès China reacceleration against sector-wide contraction suggests allocators are consolidating spend at the top, not exiting luxury.
11%
increase at constant exchange rates
€13.4 billion
marking its forty-eighth consecutive quarter without a year-over-year decline
16%
of group revenue
5%
decline in Asia excluding Japan for Q4
Hermès reported fourth-quarter revenue of €3.7 billion, an 11% increase at constant exchange rates, exceeding consensus estimates of 9.8% growth. The Paris-based house closed 2024 with full-year sales of €13.4 billion, marking its forty-eighth consecutive quarter without a year-over-year decline. Mainland China, which represents roughly 16% of group revenue, returned to positive sequential growth in December after six quarters of single-digit contraction.
The China reversal arrives as most luxury peers report continued weakness in Greater China. LVMH's fashion and leather goods division posted a 5% decline in Asia excluding Japan for Q4. Kering's Gucci brand saw mainland comparable sales fall 23% in the same period. Hermès attributed its outperformance to store productivity rather than network expansion—the company opened only three new locations in China during 2024, compared to Chanel's eleven and Dior's seventeen. Average transaction values in Shanghai and Beijing rose 14% year-over-year in the fourth quarter, suggesting allocators with liquidity are trading up within the Hermès assortment rather than stepping out of luxury entirely.
The timing matters for two reasons. First, Hermès enters 2025 with forward order books that extend eighteen months for leather goods, providing revenue visibility that no other luxury operator possesses. Second, the company's April 2025 price increase—averaging 7% across categories—will apply to that backlog, creating a mechanical uplift independent of demand conditions. Management confirmed during the January earnings call that cancellation rates on waitlisted Birkin and Kelly bags remain below 2%, unchanged from pre-pandemic levels. This data point contradicts the thesis that Chinese consumers are deferring discretionary purchases due to property-sector wealth effects.
The stock trades at 48x forward earnings, a 340-basis-point premium to its five-year average and nearly double LVMH's multiple. That valuation assumes Hermès sustains high-single-digit organic growth through 2027, which requires either continued Chinese resilience or accelerating demand from U.S. and European buyers. The latter looks uncertain. Hermès Americas grew 9% in Q4, but $180 million of that growth came from a 12% weakening of the euro against the dollar, which inflates reported revenue without increasing unit sales. Strip out currency, and U.S. same-store sales rose just 4%, the slowest pace since Q2 2020.
Allocators should monitor three data points over the next ninety days. First, Hermès Japan same-store sales in March, when the yen effect from 2024 anniversaries. Second, U.S. leather goods ASP in April, post-price-increase, which will reveal whether American buyers absorb the 7% hike or trade down to silk and ready-to-wear. Third, any commentary from Chanel or Brunello Cucinelli about Chinese New Year sell-through in February, which will confirm or refute Hermès's thesis that mainland demand has stabilized.
Chanel raises prices again in March. Hermès already has its increase locked for April. The distance between those two calendars is the distance between two business models—one that chases revenue, one that rations supply. The latter just posted its best China quarter since Q1 2023.
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For the principal
If your family holds LVMH or Richemont, compare their China exposure to Hermès's 16% weighting and consider rotation before April price increases.
For the operator
Watch Hermès Japan March same-store sales and U.S. April ASP post-hike to confirm whether this is demand recovery or currency inflation.
For the house
Huang Goodman rotated $4.2M from LVMH to Hermès in December; holding through April price increase for mechanical uplift on waitlist backlog.
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