Hermès on Track to Outpace Louis Vuitton in Sales, Predicts Citigroup

Hermès on Track to Outpace Louis Vuitton in Sales, Predicts Citigroup

Citigroup Analysts Forecast Hermès to Reach €20 Billion in Sales by 2027

Citigroup Inc. analysts predict that Hermès could surpass Louis Vuitton as the leading brand in the luxury industry by turnover in the coming years. According to a note by analyst Thomas Chauvet dated April 12, Hermès is expected to reach the “symbolic” €20 billion ($21.3 billion) sales mark by 2027 or earlier, a benchmark Louis Vuitton achieved in 2022. Hermès reported group revenue of €13.4 billion in 2023.

Hermès Fall 24

Chauvet emphasized Hermès’ robust financial health, stating, “Hermès enjoys one of the most predictable growth, margin and cashflow profiles in the luxury industry.” He also noted the brand’s successful pricing strategy that spans from affordable to ultra-luxury, its tight control over distribution channels, and the potential for growth in non-leather categories such as ready-to-wear, watches, jewelry, and tableware.

Thomas Chauvet, Head of Luxury Goods Equity Research & Global Pod Head, Consumer Discretionary at Citi

Despite concerns about a slowdown in the luxury sector post-pandemic, Hermès shares have significantly outperformed the broader luxury goods market this year, recording a 20 percent increase. In contrast, a gauge tracking the industry has risen only 6.8 percent, while shares of LVMH, the parent company of Louis Vuitton, have increased by 8.2 percent. On Monday alone, Hermès’ stock rose by 1.8 percent, edging closer to Chauvet’s price target of €2,350. Chauvet has maintained a neutral rating on Hermès since he began covering the stock in 2020.

Hermès is considered relatively resilient to downturns in the luxury market due to its appeal to extremely wealthy clients and its business model that leverages product scarcity. The company is expected to release its first-quarter sales figures on April 25.

LVMH remains the world’s largest luxury group, encompassing 75 brands across various sectors including handbags and Champagne. According to HSBC analysts, Louis Vuitton represents approximately 50 percent of LVMH’s profitability and accounts for 26 percent of its sales.