Hermès' fourth-quarter revenue rose 9.8%, exceeding expectations, with strong performance in the U.S. market driving results against the trend | Earnings Report Insights

Against the backdrop of an overall slowdown in the luxury industry, Hermès benefited from ultra-high net worth customers (who are less sensitive to inflation and macro fluctuations) and a long order backlog, once again delivering a "stable and slightly strong" report card.

On February 12, French luxury giant Hermès released its fourth quarter and full-year financial report for 2025. The company’s fourth-quarter revenue grew 9.8% at constant exchange rates, not only continuing its steady growth, but also exceeding the consensus forecast by Visible Alpha analysts (8.4%).

By region, the Americas (mainly the US) was the standout, with fourth-quarter sales rising 12.1% at constant exchange rates, significantly higher than the market expectation of about 9%; demand in Japan was also strong, continuing to support the group’s resilient growth globally.

In terms of product structure, the leather goods and saddlery division (including core categories such as Birkin and Kelly) saw organic growth of 14.6%, again outpacing the group’s overall growth rate, showing that the "scarce supply + strong brand power" business model is more defensive during slowdown cycles.

Profitability continued to rise: The company’s full-year operating profit reached €6.57 billion (about $7.79 billion), with an operating margin of 41%, slightly higher than the market expectation of 40%. At the same time, Hermès announced a dividend of €18 per share. Management said it will enter 2026 "with confidence," but the price increase this year is expected to drop to 5%–6%, lower than 6%–7% in 2025.

Revenue: Q4 up 9.8% at constant exchange rates, continuing solid performance amid headwinds

The core information of this financial report is: In an environment where peers are generally facing weakening demand and shrinking room for price increases, Hermès has still achieved nearly double-digit growth in the fourth quarter, and exceeded expectations.

Reuters pointed out the company benefited from ultra-high net worth clients (less sensitive to inflation and macroeconomic fluctuations) and its long order backlog, making its resilience during sector slowdowns significantly superior to most luxury brands.

Full-year operating profit of €6.57 billion, with a margin of 41%, slightly higher than the market expectation of 40%; while most luxury brands are under pressure from discounts, channel adjustments, and higher marketing investment, Hermès’s margin beats expectations, which seems to be a natural result of its business model (scarce supply, strong brand power, and premium product structure).

Previously, Kering Group announced on Tuesday that Q4 sales were €3.9 billion, down 3% year-on-year at constant exchange rates. Its flagship brand Gucci's sales fell 10%, marking the 10th consecutive quarterly decline, though it performed better than the market expectation of a 12% drop.

Regional Performance: Americas up 12.1% and exceeds expectations; US demand reconfirmed

Sales growth of 12.1% in the Americas was an "unexpected pleasure" in the report, not only higher than consensus expectations, but also indicating that purchasing power for top-tier luxury goods in the US remains intact. For investors, the importance of this data is: when mid-to-high-end consumption wavers, whether leading brands can maintain momentum in the US often determines the lower bound for annual growth.

Additionally, the strong performance in Japan was also highlighted by management and coverage. Currency factors, tourism consumption, and local structural demand for high-end leather goods and accessories remain one of Hermès’s relatively certain growth drivers in recent years.

Category Structure: Leather goods division up 14.6% organically; core engine remains strong

The leather goods and saddlery division is the “ballast stone” of Hermès's profits, as well as the category where scarcity and pricing power are most concentrated. This quarter, the division grew organically by 14.6%, significantly faster than the group as a whole, indicating that high-end bags and other core products remain in short supply, with a stable price and allocation system.

At the industry level, this also explains why Hermès can better weather cycles: when demand weakens, categories relying on logo and trend-driven products are more susceptible to fluctuation, while top luxury leather goods, characterized by strong craftsmanship barriers and controlled production pace, are better able to maintain growth and margins.

Pricing Strategy: Price increases to slow to 5%–6% in 2026, but 'price' remains a key variable

CEO Axel Dumas indicated that this year's price increases are expected at about 5%–6%, slower than 6%–7% in 2025, and partly attributed the reason to exchange rate changes.

The luxury industry in recent years generally depended on price hikes to offset costs and sustain growth, but as demand cools, many brands have "hit the brakes." While Hermès is also slowing its pace of price increases, it still maintains a relatively clear annual plan, reflecting its confidence in customer tolerance and brand premium.

J.P. Morgan analysts also pointed out Hermès's price increase execution this year will be one of the key factors affecting its growth outlook: Under relatively controlled supply, price remains the core lever of the company's revenue and profit elasticity.

What will the market watch next: US momentum, realization of price increases, and supply rhythm

Looking ahead to 2026, the market focus will be on three points:

1. Whether high growth in the Americas can continue, especially amid macro and high-end consumer changes in the US.

2. The impact of price increases of 5%–6% in different regions and categories, and whether this will affect sales and waitlists.

3. Amid the long order backlog, how Hermès will balance capacity expansion and scarcity management, continuing to turn “supply rhythm” into long-term pricing power.

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