00:00So a fantastic quarter for Hermes, but it wasn't thanks to perfume or beauty or anything like that.
00:05It was really all thanks to the Birkin bag, Deborah.
00:08And my first question would be, is this because people are buying an investment?
00:12Or is it genuinely that they have dollars to spend on luxury items?
00:16Because they would be very different reads of the US and foreign consumer.
00:22Hi. Yeah, it's very much domestic driven.
00:25And it is by those individuals who generally own more than one of the product within the brand range.
00:34And actually, we've seen the Birkin bag, yes, still very strong.
00:39Other brands and styles strong, too.
00:42But now Leather Goods is 45% of sales.
00:45It used to be 55%.
00:46So also for Hermes, there's quality within homewares, ready to wear jewellery and others, which are also driving this growth.
00:53So we saw growth 1Q 7%, 4Q 10%, so some momentum building.
00:59How is Hermes dealing with the global tariff environment and just this turn inwards on the part of many countries
01:06now?
01:07Can it, you know, get the raw materials it needs, you know, get the labour it needs and still keep
01:13those margins healthy?
01:16So very vertically integrated.
01:18That's one of its core strengths, a major core strength.
01:23It's artisans.
01:24It takes on around 250 new artisans a year.
01:27It adds one production factory per year.
01:30And what it did last year, particularly for the US, we saw high single digit pricing.
01:35Generally across the board, it's 5% to 6% pricing, which they'll carry through into 2026 as well.
01:41And for it and why it stands out versus its peers, its premium valuation, it's because that helps it absolutely
01:48to not only manage margin but to grow margin.
01:51So we actually saw operating margin up over 100 bips, beating consensus very nicely.
01:57Sorry, gross margin up over 100 bips, beating consensus nicely, operating margin up as well,
02:03and carrying through what it did on the net on revenue to the EPS line, despite those tariffs,
02:09the extra surcharge on corporation tax in France, headwinds from currency and others.
02:15So a very solid set of results.
02:17A hugely impressive performance.
02:18A hugely massive performance.
Comments