'Hermes enjoys one of the most predictable growth, margin and cashflow profiles in the luxury industry,' said Thomas Chauvet.
Hermes has potential to surpass LVMH’s flagship Louis Vuitton in the coming years as the luxury industry’s biggest brand by turnover, according to Citigroup analysts. The Birkin bag maker’s sales are set to hit the “symbolic” €20 billion level by 2027 or before, Thomas Chauvet wrote in a note dated April 12 — a milestone that the Louis Vuitton fashion label reached in 2022. Hermes generated group revenue of €13.4 billion in 2023.
While there have been concerns over a slowdown in demand for high-end items following a post-pandemic boom, Hermes’ shares have outperformed fellow luxury goods stocks with a 20% gain so far this year. A gauge tracking the industry is up just 6.8% over the same period, while LVMH has risen 8.2%. The stock gained 1.8% Monday, taking it closer to Chauvet’s price target of €2 350. He has had a neutral rating on Hermes since initiating coverage in 2020.
analysts have estimated that Louis Vuitton alone generates around 50% of LVMH’s profitability, and accounts for 26% of sales. © 2024 Bloomberg
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