HESAF - Unpacking Hermès: A Model For Luxury Brand Success

2024-05-31 08:17:41 ET

Summary

• Hermès has outperformed the S&P 500 during the Covid crisis and has shown resilience in the face of market disruptions.
• The company's business model relies on manufacturing skills, controlled distribution, and expanding its brand reach to other market segments.
• Hermès has maintained revenue growth, improved profit margins, and has a healthy balance sheet, but valuation multiples are high.

I have recently been reviewing luxury brands, mainly because these companies, when well-managed, are capable of performing better than the general market during stressful periods. Hermès ( HESAY ) ( HESAF ) is a good example. Below you can see that coming into the Covid crisis, Hermès was performing better than the S&P 500, and it kept it that way even through the most difficult days. Even if gold was a better performer during the peak crisis days, the truth is that it didn't take long for Hermès to leave everyone in the dust....

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