As expected, Hermès announced a 30% spike in third quarter 2022 revenues (24% at current exchange rates). We’ll delve into that, but the big news is that Hermès plans to increase prices 5-10% in 2023.
This is a big jump from the typical annual Hermès price hike in the 3% range. Eric du Halgouet, the brand’s President of finance, pointed to increased costs and currency movements, as reported in Reuters.
So, what does this mean for lovers of the brand’s Birkin? Well, a 10% hike on a $10,000 bag results in an extra $1000 on the price tag.
It’s a large change, no doubt, but unlikely to affect the purchasing of most Birkin buyers. After all, $1000 probably won’t interfere with your dreams of that holy grail bag. You may have to save up longer or trim some other purchases, but demand continues to exceed supply.
As for the actual Q3 results, they were up for all business lines. The only group not hitting double digit marks was Perfume and Beauty. However for the first nine months of 2022, all lines rose in double digits.
Revenues for the largest group – Leather Good and Saddlery – rose 13.2% (at constant exchange rates) over Q3 2021. For the comparable nine month period of 2022, the increase is 12.5%. It would appear that the limited availability of handbags experienced by shoppers affected these numbers.
Whereas during the height of the pandemic the home goods division benefitted as homes were decorated a la Chez Hermès, now the focus is wardrobe. Ready-to-Wear Q3 revenues rose 42% over that quarter in 2021.
And clearly Hermès is succeeding with its emphasis on Watches, introducing new models, seen on the likes of Ben Affleck and, of course. Revenues more than doubled over Q3 2021.
Geographically, all regions are up, with Asia (not including Japan) leading the pack. Its revenue rose 31% in Q3, 21% for 2022 so far. And France and the Americas are not far behind – each lifting about 28% in Q3.
Will a 10% price increase on Hermès bags change your purchasing plans? With the supply of bags so limited, maybe you’re grateful for extra time to save up.
Or perhaps you are pleased that the value of your collection could increase. Many expect these boosted price tags to be reflected in the secondary market. Indeed, there are long time Hermès aficionados who, at least in private, wish that prices and values would rise more quickly.