Analysis by Price Bailey highlights a growing divide between Hermès’ robust growth and challenges faced by other major luxury retailers as insolvencies rise across retail subsectors.
As the luxury retail market grapples with shifting consumer behaviours and economic headwinds, Hermès stands out as a unique success story.
An analysis by Price Bailey, a leading accountancy firm, reveals that while most luxury retailers face a financial squeeze—with growing insolvencies across the sector—Hermès continues to defy the trend with strong, consistent year-on-year growth in both revenue and profitability.
According to Price Bailey’s data, Hermès reported revenue of €13.4 billion and an EBITDA of €6.4 billion in 2023. Forecasts suggest this upward trajectory will continue through 2025, with revenue projected to reach €16.2 billion and EBITDA climbing to €7.2 billion. This financial health contrasts sharply with some of its largest peers.
For instance, Kering’s revenue is expected to decline by 24% (from €19.6 billion in 2023 to €14.9 billion in 2025), alongside a steep 44% forecast fall in EBITDA. Richemont, while managing a revenue increase projected to €21.4 billion in 2025, saw its EBITDA fall by nearly 8%.
Even LVMH—the sector’s largest player by revenue—is expected to see a revenue dip from €86.2 billion in 2023 to €80.8 billion in 2025, with EBITDA projected to drop from €30 billion to €24.5 billion.
Hermès’ enduring appeal is attributed to its distinctive operating model. As Chand Chudasama, Strategic Corporate Finance Partner at Price Bailey, notes, “Their operating model and brand is fundamentally different to their peers and this is being rewarded with high margins, growth and maintaining value creation for shareholders.”
The brand’s focus on craftsmanship, scarcity, and heritage allows it to avoid the aggressive marketing battles and pricing competition experienced by others in the luxury segment.
Recent half-year results reinforce Hermès’ position as a beacon of resilience. In the first half of 2025, Hermès achieved revenue of €8 billion, marking a 7% increase year-on-year despite headwinds from tariffs and macroeconomic uncertainty.
Key growth drivers included Leather Goods and Saddlery, which rose 12%, and strong regional performance led by the Americas (+12%), Europe (+13%), and Japan (+16%). This contrasts with broader sector trends, where many rivals report flat or declining sales due to factors such as reduced Chinese consumer spending and geopolitical tensions.
Hermès’ margins remain enviably high, with recurring operating income at 41.4% of sales for the period. The company also continues to invest in production capacity, expanding workshops and securing supply chains to meet sustained demand for its iconic products.
However, challenges loom on the horizon. Hermès faces an antitrust lawsuit in the US concerning the exclusivity of its Birkin bag distribution, alongside growing regulatory demands in Europe for sustainability transparency and compliance. How the brand navigates these legal and environmental pressures will be crucial for maintaining its market standing.
The broader luxury market is navigating a bumpy road. Recent global market data show a 2% contraction in personal luxury goods spending in 2024 to €363 billion, driven by uncertain global economics and changing consumer preferences.
Brands without Hermès’ entrenched heritage and agile model face more uncertainty ahead, emphasising the premium placed on brand strength and operational resilience.
Executive Summary: Financial Outlook for Major Luxury Groups (2023–2025)
Hermès:
- Revenue growth from €13.4 billion (2023) to €16.2 billion (forecast 2025)
- EBITDA growth from €6.4 billion to €7.2 billion in the same period
- Operating margin of approximately 41.4% in early 2025, showcasing robust profitability
- Consistent double-digit growth in key regions such as the Americas, Europe, and Japan
- Business model anchored in heritage craftsmanship, product scarcity, and limited need for aggressive marketing
LVMH:
- Largest luxury player by revenue; revenue forecasted to decline from €86.2 billion (2023) to €80.8 billion (2025)
- EBITDA expected to fall from €30 billion to €24.5 billion
- Regional performance mixed: growth in Europe, the US, and Japan; decline in Asia-Pacific largely due to weakened Chinese consumer activity
- Maintains strategic investments in innovation and brand desirability despite headwinds
Richemont:
- Revenue expected to rise from €19.9 billion (2023) to €21.4 billion (2025), reflecting strong Jewellery Maisons performance
- The EBITDA forecast shows a decline of around 7.7%
- Increased distribution and manufacturing investment support growth objective
- Regional sales mixed, with notable declines in Asia-Pacific offset by gains elsewhere
- Projected revenue decline from €19.6 billion (2023) to €14.9 billion (2025), a 24% drop
- EBITDA forecast to fall sharply by 44%
- Challenges are largely due to steep declines in flagship brand Gucci’s sales (down 26% in the first half of 2025)
- Recent leadership changes and new product launches provide potential recovery catalysts
Key Insights:
- Hermès stands apart due to its exclusive brand positioning, craftsmanship, and controlled supply, enabling resilient high margins and growth
- LVMH and Richemont continue to show strength but face regional and segment-specific challenges
- Kering’s performance underscores risks linked to overreliance on a few brands in volatile markets
- The divergence highlights the premium placed on heritage, operational discipline, and strategic agility in luxury retail success
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