Hermès - Silent King

[TurvaMarkka]

Even though Luksusta salkkuun muodin huipulta mentions Hermès, I think this company is unique enough to deserve its own thread.

Introduction
A brief history of Hermès from YouTube

Hermès is a French luxury brand known especially for its high-quality handmade products, such as handbags, silk scarves, leather goods, and accessories. The company was founded in 1837 in Paris, and its roots lie in the tradition of master saddlers. Originally, Hermès manufactured leather harnesses and equestrian equipment, but over time the brand expanded to cover a wide range of luxury products.

The most famous Hermès products are the iconic Birkin and Kelly bags, which are among the most sought-after luxury handbags in the world. These bags are valued both for their top quality and the precision of the craftsmanship—each bag is made by hand, and its manufacture can take up to several weeks.

Hermès has maintained its family ownership (approximately 75%) and focused on staying true to its craft traditions, which has allowed it to maintain its position as one of the world’s leading luxury brands. The brand combines traditional values with modern elegance, and its products are symbols of timeless style, quality, and luxury.

Company Specialties

Kelly bag
The Kelly bag is iconic; it became popular when Grace Kelly tried to hide her pregnancy behind the bag in 1956.
Grace Kelly was a famous Hollywood actress at the time she started dating Prince Rainier III of Monaco, and people became even more interested in her. The story of Hollywood star to Princess was a brilliant tale that piqued interest and curiosity. Kelly’s pregnancy photo ended up on the cover of Life Magazine, and this attention led women to go to Hermès stores asking for the “Kelly bag,” so Hermès quickly rebranded the bag as the Kelly bag.
The manufacturing of the bag is slow because everything is made by hand from start to finish using high-quality materials. The slow production also makes it desirable, as demand exceeds supply.

Birkin bag
The story of Jane Birkin and the iconic Hermès Birkin bag began on an airplane in the 1980s, when the Franco-British actress and singer Jane Birkin was traveling from Paris to London. According to the story, Birkin happened to sit next to the CEO of Hermès, Jean-Louis Dumas, on the flight. Jane Birkin had a wicker basket with her that she used as a handbag, but its contents had spilled and scattered across the floor during the flight. This led to a discussion about how difficult it was to find a practical yet stylish handbag that would be spacious and functional for daily use.

Dumas asked Birkin what her dream bag would be like. Birkin described a bag that would have enough space, pockets, and practicality, while being beautiful and timeless. Dumas was inspired by this conversation, and the result was a new Hermès bag, which was named “Birkin” after Jane Birkin.

The Birkin bag became one of the world’s most desirable luxury handbags, symbolizing both practicality and elegance. Jane Birkin used the bag for a long time and mentioned in interviews that she was honored to have the bag named after her, though she didn’t initially expect it to become such a massive phenomenon in the fashion world.

The wealthy, who have money but no time, are willing to pay extra for a Birkin bag to get it immediately. This increases the resale price of the Birkin bag. Although the bags can be purchased from Hermès stores, their availability can be limited, and many customers may wait a long time before being offered the chance to buy one. Some may buy the bag solely for its resale value, as a bag’s resale price can be 110%, though this depends on the model and market situation.

Wealthy women collect Birkin bags because their value is constantly rising. The increase in value can be significant, but a 14% annual growth doesn’t apply to all bags. This also depends on, among other things, the bag model, condition, and market situation.

Quality

Hermès focuses on quality. The company is built to stand the test of time, and the same applies to its products. Axel Dumas, the current CEO, has continued the Hermès tradition as a company focused on quality and craftsmanship.
Axel Dumas CEO:

Hermès has no debt at all because it has prepared for bad economic cycles. This reminds me of Berkshire Hathaway, which sits on a large cash pile and avoids taking on debt.

Freedom
A sense of freedom prevails at Hermès; it doesn’t try to push products onto customers or create products for a specific customer group. Artisans are given the freedom to create art, which attracts artists to work at Hermès.

Hermès’ freedom is also reflected in the fact that it doesn’t answer to owners, which I think is a great thing. Nowadays, investors want quick wins and all production must be streamlined and accelerated. Hermès, however, is not that kind of company; it plays the long game. The Hermès family owns about 75-80% of Hermès, either directly or through holding companies; they truly think about the company’s best interest in the long run.

“Virtuousness”
In 2023, Hermès gave all employees a €4,000 bonus because earnings grew by +20% in 2022.
link

Other Sustainable development matters

Comparison to LVMH

In my opinion, LVMH has become department store-like. In every city where I’ve walked down a luxury street, the brands look the same: Dior, Prada, Gucci, Louis Vuitton. Of these, Dior perhaps the least. The purpose of luxury products is to stand out from the crowd, but nowadays, Louis Vuitton bags are seen everywhere.
Hermès aims to differentiate itself from these other brands, and Hermès stores are rarely found on the same street as other luxury brand stores. Hermès is a true luxury brand because it does not advertise itself aggressively.
Axel Dumas CEO:

Hermès raises prices, but the wealthy are willing to pay because the products are exclusive and of high quality.
In the luxury industry, raising prices makes products more desirable, whereas in other industries, lowering prices is often necessary to increase sales. This is the beauty of the luxury industry.

Competitive Advantages1. Hermès is one of Europe’s oldest luxury brands. Hermès has successfully branded itself in keeping with the spirit of the times, and the Birkin bag was a significant turning point. Hermès’s history as a manufacturer of equestrian equipment has helped it penetrate wealthy and aristocratic circles.
2. High standards with no compromises. Craftsmanship takes time, leading to an imbalance between supply and demand. This is reflected in product prices.
3. Hermès stands out from other luxury brands due to its “quiet luxury” approach. Its products do not scream the brand with large logos, and the wealthy appreciate this subtlety.
4. Truly high-quality craftsmanship and the best possible materials.
5. Timelessness and classic style that last for decades.
6. Brand exclusivity: Hermès products are expensive, and their customer base is small but wealthy. During difficult economic times, Hermès customers can still afford luxury.
7. Hermès provides excellent customer service. When a customer feels valued, they are happy to buy more products without questioning the prices.
8. Hermès products are status symbols. Luxury brands have also grown in popularity among young people in Finland. For example, the iPhone is a status symbol, and in schools, people even choose friends based on their phones.
9. People’s need to stand out from the crowd is so strong that they are even willing to pay for it.

Morgan Stanley has listed Hermès as a company with truly extensive competitive advantages (wide moats).
morganstanley p. 37 Wide Moat Businesses

finally.

Even this grandma looks stylish in Hermès.

[Aili]

A really great opening post. Thanks for this.

An interesting thing about Hermès is that LVMH tried to take it over at the turn of the 2010s.

Even back then, the Hermès family held 73% of the company’s shares, but the shares were divided among 60 people. There were descendants of the founder, Thierry Hermès, spanning six generations.

LVMH itself originated from consolidating the industry in the 1990s and starting to buy luxury brands after realizing the growing wealth of the middle class and the increase in demand for luxury.

When LVMH’s stake rose to 17%, the family took countermeasures. The majority wanted to keep ownership within the family, but not everyone shared the same principle.

The Hermès heirs then created a holding company, in which they gathered over 50% ownership, and it fiercely protested the takeover attempt.

For Hermès, how and where things are made still matters greatly. Patrick Thomas points out, “We are not just Hermès, we are Hermès Paris, and some 85 per cent of our products are still made in France in our own workshops. But we make wherever we find the best workmen and skills. Watches we make in Switzerland in our own factory, because that is where the best expertise is to be found. Women’s fashion is made in France, men’s in Italy.” Every Hermès bag is made by a single craftsperson who sees it through from beginning to end. Nobody denies that Louis Vuitton makes high-quality, deliciously desirable bags but they are not made in the same way; it is telling that last year Louis Vuitton was forced to withdraw advertisements in the UK that implied that all its handbags and purses were made by hand.

Pierre-Alexis Dumas, the general artistic director of Hermès and son of Jean-Louis Dumas, was also keen to explain to me the cultural differences between the two companies. “We are not in the business of selling large numbers of the same product at a high price. Our business model is focused on the quality of each object, not on the quantity. The problem is that this model is not compatible with the expectations of a large financial conglomerate. Our time frame is completely different. We are innovative artisans, constantly evolving to meet modern needs, but nevertheless we stick to the founding family’s principles of wanting to make the day-to-day objects that our customers use as beautifully and perfectly as we can. But to do this we need to do things much more slowly.” And here he echoes the words of Patrick Thomas: “We do want to be profitable, but profit is not the driving force. It is the reward.”

Finally, in 2014, an agreement was reached, and LVMH promised that it would no longer increase its ownership stake but would instead distribute its shares to its shareholders. Arnault certainly wouldn’t have wanted to back down, but that is what the French judiciary made him promise.

There were all kinds of allegations ranging from trading practices to insider trading and stock price manipulation.

In the final stages, the ownership stake had risen to 23 percent, which was a pot worth 7.5 billion at the time.

LVMH shareholders received two Hermès shares for every share they held.

[TurvaMarkka]

Why am I so enamored with this company?

Focus on quality and craftsmanship.
Nowadays, it feels like everything has to be obtained as cheaply as possible, and quality is not appreciated. Or if it is, people aren’t ready to pay for it. Hermès focuses specifically on making products of the highest quality possible.

Freedom.
Hermès does things their own way, focusing on the long game. They are owners, and they want the company to be standing and succeeding 20–40 years from now. That’s why they avoid debt and maintain cash for a rainy day. Institutions and investors want Hermès to grow faster, but the Hermès family disagrees. They have a Warren Buffett-like style of progress – why risk other people’s money just for returns that are coming in well anyway? One shouldn’t be greedy.

Artisans have the freedom to create art according to their own mind and fulfill themselves. This is what I believe artists want most – to be free and fulfill themselves. On top of that, they get paid by Hermès.
This is very important nowadays because people value comfort, and many change jobs as soon as the work no longer appeals to them. Hermès seems like the kind of workplace that remembers its employees with good pay, bonuses, and freedom. If this is the case, I don’t believe employees would easily switch to a competitor.

A sophisticated touch.
Sophisticated taste comes from being able to detect subtle signals – for example, tasting nuances in food and drink that others miss. For example, Tornio Brewery’s Original Lager was chosen as the world’s best lager, and it has long been my favorite. It has exactly this sophisticated touch – the taste isn’t dominant, but a subtle hint.
This same feeling comes to mind with Hermès – a subtle brand that doesn’t scream “I AM Hermès, LOOK AT ME”. This Hermès “quiet luxury” is to my taste – maintaining quality where “those who know, know,” without making a big deal of it.

The Magic.
Hermès has achieved its position in royal and wealthy circles, which makes it unique. Raising prices maintains Hermès’ position in these circles. The position is very strong, and I think it’s hard to challenge.
In my opinion, the magic of LVMH’s Louis Vuitton has started to fade; it seems like a department store to me. I think Hermès can preserve its magic better because it’s a distinct brand. I strongly believe that Hermès will overtake LVMH over time.

Heritage.
The stamp Hermès has is such that it takes time for new companies to achieve it, so competition is limited. This moat is hard to break unless the fabric of time can be distorted.
There is no official recognition for a “heritage” label in the luxury industry, but it’s usually given to 50–100-year-old companies that have produced quality goods year after year.

Luxury.
When product prices are raised, they sell better. In other industries, prices must be lowered to increase sales volume. This is what I love about luxury companies – often a strong brand and pricing power.
Vanity as a driver.
People are vain and always will be – I can count on that. Additionally, healthy envy acts as a driver – if a neighbor buys a backyard grill, I’ll buy a bigger one. This rat race is often seen among the wealthy.

Long-term trends and classics.
Nowadays people chase fast fashion, and in 5–10 years, they’ll look at photos and wonder what they were thinking. Personally, I like classics because they stand the test of time.
For example, I don’t read the news as closely anymore because information expires so quickly, even in hours. I’d rather read classic books that have stood the test of time – that way, knowledge builds upon knowledge.
I believe the same applies to Hermès – if you’ve bought Balenciaga “dress shoes,” you can’t wear them with a suit to a party. Likely in 5–10 years they will already be out of fashion because they look tacky anyway.

Beauty looks back.
If you buy a beautiful product, that product looks back at you. You start wanting more beautiful products – the good old Diderot effect.

Product value.
Hermès products, especially the Kelly and Birkin bags, either maintain their value or will appreciate. Hermès products are such that if they are in good condition and really old, I believe you can get a good price back if they are resold. For the Chinese, the preservation of product value is important.

Defensiveness.

1. Family ownership of 75%, and holding companies keep control within the family, which keeps the company alive.
2. The company is managed with a long-term perspective, and quick wins are not pursued. This is a great strategy in the long run – focusing on quality, which breeds more customers as people become wealthier.
3. Hermès is well-managed by the family, and I believe the company will still be churning out money 20–40 years from now. The company has been able to do it since 1837 – why not in the future too?
4. Hermès’ customers are extremely wealthy, and in difficult times, they are not the first ones to run out of money. This makes Hermès very defensive. Just as Charles-Émile Hermès, son of Thierry Hermès, made the significant decision to move the company to 24 Rue du Faubourg Saint-Honoré in 1880. This strategic choice placed Hermès among luxury clients, near Paris’s Champs-Élysées and areas favored by the wealthy.
5. Extremely strong brand – brands have pricing power. If you want this specific product, you have to buy this brand.
6. Diversification into several product segments, but leather goods dominate. This is a good thing because, in my opinion, leather goods are “ultimate luxury.” Nowadays, plastic products are so cheap and don’t stand the test of time. Leather, on the other hand, patinas beautifully over time.
7. In my opinion, Hermès treats its employees really well – the €4,000 bonus per employee distributed in 2023 was very generous, I think.
8. Geographical diversification – across several different countries.
   map

Final analysis
In my opinion, Hermès is the kind of company that checks the following boxes of my criteria:

1. I understand the business well.
2. Technology does not disrupt this industry such that the story would change drastically overnight.
3. I see the company standing 20–40 years from now as well.
4. Making the same returns, even better ones in the future, year after year.
5. Strong competitive advantages and massive profit margins, as well as good +12% growth for a company of that size.
6. Strong trends, and the market is growing rapidly.
7. People are getting wealthier and find their way to luxury.
8. I see that I can sleep soundly with this stock without having to monitor every rustle.
9. I believe time will correct my mistakes, even if I paid a bit too much for this company now. But I believe this company’s multiples rarely contract; the long-term outlook looks very good to me.

10. I like companies that make good returns but are defensive. Such companies ensure that I have dry powder when everything collapses and stock prices are low.

[JNivala]

Thanks for the excellent start, I’ve been meaning to write a post about this company for the Global Quality Companies thread as well, but haven’t got around to it due to being busy

A couple of points I wanted to highlight regarding Hermès. When I first researched the company and saw the stock charts, I thought to myself that there was probably quite a lot of multiple expansion to extremes behind it. And yes, there has been a stretching of valuations over the past 10 years, but less than I expected:

Another interesting highlight, though not as relevant to the share price. Although the stock chart looks at least as amazing as the business performance, even these companies suffer from drawdowns from time to time. Below is a 10-year graph related to drawdowns.

[Sijoittaja-alokas]

HCP’s Havia has been writing about luxury goods and Hermès in particular

As you might expect, Hermès’ business is very profitable. The company’s gross margin is over 70% and net margin is over 30%. The business recipe has remained almost unchanged for about 150 years. The company also buys back its own shares. Everything looks good. What could go wrong?

Luksustuotteiden megatrendi: Tarkastelussa Ferrari ja Hermès - Inderes

[Sijoittaja-alokas]

The tweet gives the impression that this company could be an attractive investment, especially for a long-term investor who trusts/understands the company’s strong brand, history, and growth. However, it is important for investors to monitor brand management in companies like this and the ability to protect against imitations, but I am not capable of doing this myself, so I rely on the assessments and writings of those more informed.

The luxury market is naturally sensitive to economic changes, so it is worth monitoring the effects of economic cycles on consumer behavior—for instance, how the trend appears in China and elsewhere in Asia. Even though the company is a leader in its field, the competitive landscape is constantly changing, and the activities of new entrants should be followed.

Product development and innovation are Hermès’ strengths, but sustainability and sustainable development have also emerged as important themes. It also feels like the company knows how to monitor trends well, or at least that is my understanding based on what I have read.

Below is a tweet about Hermès.

https://x.com/QCompounding/status/1842898297180021059

[TurvaMarkka]

Q3 2024

The group’s consolidated revenue amounted to €11.2 billion at the end of September 2024, up 14% at constant exchange rates and 11% at current exchange rates compared to the same period in 2023. In the third quarter, sales continued to rise and reached €3.7 billion, up 11% at constant exchange rates and 10% at current exchange rates. All regions are growing, despite a particularly high comparison basis in Europe and Asia-Pacific.

Axel Dumas, Executive Chairman of Hermès, said: “In a more uncertain economic and geopolitical context, I want to thank all employees for the robust third-quarter performance, and our customers for their loyalty. Thanks to the singularity of its model, Hermès is continuing its recruitments and long-term investments.”

asia +7%
japan +23%
americas +13%
europe exluding france +18%
france +14%

leather goods ad sadlery metier +17%
ready to wear +15%
silk and textiles +2%
perfme and beauty +7%
watches -6%
other Hermes sectors +17%

Link: Hermes publications

link Q3 2024

Hyvä tulos, ottaen huomioon, että muut luksus firmat ovat ottaneet kunnolla osumaa Aasian takia.

[Cacky]

For fans of auditory experiences, here are a couple of podcasts about Hermès:

The Acquired episode provides a good overview of the company’s history, and especially those moments where this great story could have come to an end. For me, the best part of the episode was the concrete insight it gave into how the company treats its customers, as I happen to have little first-hand experience with it for obvious reasons.

The Business Breakdowns episode, on the other hand, is pretty standard fare for those already following the company, but a good resource for those just getting to know it. However, a “stock populism” warning should always be given for that particular podcast, so be on your guard.

[Sijoittaja-alokas]

This thread is so quiet that I dared to post this little thing related to Hermès, which might give some insight into why some people might think it’s worth investing in this company.

https://x.com/mvcinvesting/status/1869744991616081964

https://x.com/mvcinvesting/status/1869744991616081964

[TurvaMarkka]

P/E is hovering around 66.32, which is historically very high.
On average, Hermès’ P/E level is at 40.00 from 2014-2024 if you remove the years 2020 and 2021, which were exceptional due to the pandemic.

Including all years from 2014-2024, the P/E is 45.25

Hermès men’s winter 2025 show seemed very good, unique yet understated. 5/5
Hermès men’s winter 2025 show

[TurvaMarkka]

Hermès’ New Shopping Rules in 2025
The New Hermès Shopping Rules for 2025

Hermès is tightening its shopping policies in 2025. The new rules aim to regulate bag availability and customer purchasing behavior. Here are the most important changes:

1. Purchase Quantity Restrictions – Customers cannot buy an unlimited number of the same bag model. For example, the number of Mini Kelly bags per customer will be limited.

2. Broader “Quota Bag” Definition – Previously, only Birkin and Kelly bags were subject to the two-bag annual quota. Now, many Kelly variations (e.g., Kelly Pochette) and Constance bags may also fall under this restriction.

3. One Customer Account Per Person – Customers can only use one account for their purchases and cannot, for example, maintain separate accounts in the names of family members.

4. Household and Joint Accounts – If a customer chooses to use a family account, purchases must be made in-store, and quota bags will not be offered to these accounts.

5. One Shipping Address Per Customer – All orders will only be delivered to one pre-defined address.

Possible future changes:

• Global Quota System – The two-bag annual quota could in the future apply to all Hermès customers worldwide.
• Special Orders for New Customers – Hermès may start offering Special Order opportunities to new customers instead of long-term clients.

With these new rules, Hermès aims to manage the bag market more precisely and ensure more consistent availability for customers.

In my opinion, these new rules are more positive news, because the super-rich buy bags as an investment, selling them with a 110% profit.
However, Hermès wants to enable its customers to buy products so that they don’t switch to another brand. Time will tell if this was a good strategy.

1. Speculative buying decreases – Many have bought Kelly bags as an investment, as their resale value can exceed the original price. As purchase restrictions are tightened and customer accounts are monitored more closely, it will be harder for speculative buyers to acquire large quantities of bags for resale purposes. This could reduce price increases in the secondary market.

2. More consistent availability for customers – When an individual customer cannot buy multiple bags of the same model, more customers will have the opportunity to acquire the bag they want. This can increase satisfaction, especially among customers who have not been willing to compete with resellers.

3. Customer segmentation changes – The new restrictions may attract more customers who genuinely appreciate Hermès bags and reduce the proportion of those who buy only to resell. This can improve Hermès’ brand control and maintain the exclusivity of the bags.

4. Potential dissatisfaction from customers who operated under the old rules – Long-time Hermès customers may experience frustration if they can no longer freely buy their favorite models. This could lead some customers to seek alternatives from other luxury brands or try to circumvent the rules (e.g., by buying in others’ names).

5. New shopping strategies – Customers may have to adapt their purchasing behavior: for example, expanding their bag selection with new models, using family members’ accounts, or striving to build an even stronger relationship with a sales associate to get the bags they want.

[TurvaMarkka]

PDF full-year result 2024

video Hermès 2024 Full-Year Results

[TurvaMarkka]

JP Morgan Question: Impact of US Tariffs on Hermes

Hermes does not grow by opening new stores.

Hermes’ long-term goal is to capture the US market, and that is not easily changed.

We are not specialists in capitalizing on momentary opportunities. We focus on long-term plans.

We do not make decisions based on margins; decisions are long-term and strategic.

We try to achieve the same profit margin in all locations for the same product.

[TurvaMarkka]

The best thing about these presentations is how logical Hermes’ comments are.
Note: not all of the points mentioned below are in today’s video.

1. How will Asia grow?
   Hermes: We cannot predict the future; we don’t focus on profit margins but on making the highest quality product possible.

2. How do USA tariffs affect us?
   Hermes: Hermes does not grow by opening new stores.
   Hermes’ long-term goal is to conquer the US market, and that will not be easily changed.

3. Why don’t you raise product prices, you easily could.
   Hermes: Our intention is not to overcharge the customer so much that they switch to another brand. We focus on quality and charge for producing quality.

4. You are the world’s top 1 luxury firm.
   Axel Dumas: We are not a luxury firm; we are a high-quality craftsmanship firm.
   We focus on quality, not on the brand.

5. Why isn’t Hermes following current trends?
   Hermes: Our intention is not to move with fast fashion; we are bad at it. We focus on classics that stand the test of time.

6. We limit the purchase of bags so that more customers can get bags.

7. We establish stores where there are many wealthy people.

8. We do not buy another company and try to adapt it to Hermes’ ways. That doesn’t really work; it has to be created from scratch.

9. We try to avoid bureaucracy because it slows down the company.

10. If we sacrifice employees, we lose the magic of Hermes. Company culture is everything.
    Employees were remembered with a €4500 bonus when the results were so good.

11. Why does Hermes succeed when other companies in the industry struggle?
    Hermes: I have no explanation other than that we do our work well and efficiently.
    We don’t do marketing; we don’t create illusions to make people like our products.
    We are authentic; it’s not our merit, but the world came to us.

This company is truly a joy to own.

[Sijoittaja-alokas]

Hermès CEO’s comment regarding growth and the number of stores.

https://x.com/TheTranscript_/status/1893813113520324715

[Sijoittaja-alokas]

Quite a funny take from this X-account, should one buy Birkin bags to hold?

https://x.com/carbonfinancex/status/1905618879021253019

[TurvaMarkka]

Yes, if a single bag can defeat the USA, either the bag is awesome or the USA is slacking.

In luxury goods, the status symbol is what you pay for: "I own this bag, which many others cannot afford." This still makes sense, because the bag is practical and elegant, a timeless work of art.
Unlike some companies… cough Balenciaga, cough.

This phenomenon is not new. French sociologist Pierre Bourdieu has stated that luxury goods are not merely objects, but above all social markers – a means of distinguishing oneself from others. Similarly, Thorstein Veblen wrote already in the 19th century about conspicuous consumption, where we buy things precisely because they are expensive and rare. Hermès understands this, while Balenciaga plays on fleeting trends.

In the short term, even a banana thrown at a wall can be a magnificent work of art, but in the long term, it fades into oblivion. Everyone knows that a banana taped to a wall has nothing to do with art – especially when compared to something magnificent, like a Michelangelo painting.

But then art critics appear to tell us why we are fools for not understanding the banana on the wall – how it is supposedly a brave, thought-provoking, and unique statement! We couldn’t possibly understand it, because we haven’t attended enough schools to be able to criticize art.

Modern art is often precisely this – more of a conversation starter than an aesthetic experience. Philosopher Arthur Danto proposed already in the 1960s that the meaning of a work of art depends on whether the art institution accepts it as art. If enough art gallerists and critics say that a banana on a wall is art, it becomes art – whether we like it or not. But in the long run, time sifts out the trivial provocations and leaves behind those with true value.

In the long run, every person inherently understands what is beautiful and what is art. "Classics stand the test of time", they say, and bananas fade into oblivion.

True art particularly emerges in architecture: in many old cities, the old buildings are beautiful. However, this is not because only beautiful buildings were constructed in the past – quite the opposite. Historian Nikolaus Pevsner made a distinction between "buildings" and "architecture": architecture refers to those buildings that have aesthetic or cultural significance. In practice, this means that ugly and unsuccessful buildings have been demolished, and the beautiful ones have been left standing.

Hermès is king here – it focuses on long-lasting, understated trends that stand the test of time. This aligns well with fashion researcher Gilles Lipovetsky’s observation that fashion has become fast-cycled, but certain brands, like Hermès, go against the current by remaining faithful to their traditions.

Louis Vuitton Men’s Show 2025
Here’s an example from Louis Vuitton, whose style, in my opinion, is more geared towards rappers – truly flashy, strange, and dazzling. This is no coincidence: Dana Thomas discusses in her book Deluxe: How Luxury Lost Its Luster, how many luxury brands have shifted from exclusivity to mass trends.

Among LVMH brands, Dior is, in my opinion, Hermès’ toughest competitor, and its collections are absolutely magnificent.

Hermès Men’s Winter 2025 Show
Hermès, on the other hand, offers understated, elegant, and high-quality, yet striking fashion.

[MKSL]

In my opinion, these two French brands, Moynat and Goyard, can also be considered competitors to Hermès. (Hermès is still my all-time favorite, though.)

[TurvaMarkka]

Accusations have recently circulated online that LVMH, Prada, Dior, and Hermès manufacture their products in China.

Regarding Hermès, I don’t believe this is true – fake news and propaganda. I believe this is China’s response to the trade war.

Firstly, Hermès is a 188-year-old family business that is currently focused on protecting its own company.

• They have very little debt – why take a risk when they are already making a very strong profit? If the situation turns bad and interest rates rise, the company could go bankrupt due to debt. 188 years of work wasted.

• Hermès raises prices moderately, even though shareholders demand larger increases. If prices are raised too much, market share could shift to competitors. A fair price for good work.

• The holding company is structured to protect Hermès from a potential Arnault takeover, so that the company retains decision-making power and does not quickly become a profit-driven firm.

• Hermès constantly sues against illegal copies, misuse of its name, and breaches of confidentiality.
  Claims are circulating on TikTok that Hermès has sued Chinese factories for breach of confidentiality, but I couldn’t find any reliable source for this – only from TikTok and YouTube.

So why on earth would Hermès take such a risk by manufacturing its products in China – a country known for its unreliability and where quality doesn’t matter in the same way as price and quantity?

Accusation:
Hermès would manufacture 80% of its products in China and the rest in France, including logos and metal parts.

Fact:
Origine France Garantie – Official Certificate
The “Made in France” label means that the product has undergone significant final processing in France and that at least 45% of the unit costs originate from France.
Hermès meets these criteria and also uses the stricter “Origine France Garantie” certification, which requires that 50% of the costs are French and that the essential characteristics of the product originate in France.

74% of products are manufactured in France
Leather goods are primarily made in France’s 12 leather production facilities.

Newsweek – Article on luxury bag China claims 2025
on luxury bag China claims refutes the assertion that Hermès manufactures 80% of its products in China.

Some TikTok videos have mentioned Tanner Leatherstein, who was attempted to be used to support the claim that European luxury brands manufacture their products in China and label them “Made in France”.
Regarding Hermès, this is not true.

Tanner rather said that 80–90% of the product’s price is added value from the brand, artisan craftsmanship, and history, and that material costs are only a small part of the price.

Tanner also said that Chinese manufacturers produce Hermès-style bags, but they do not, for example, use Togo leather. The bags might look similar, but the materials used are not as high quality.

Tanner also posed a good question:
“If Chinese manufacturers can produce high-quality products on par with Hermès, why don’t they create their own brand and sell quality products through it?”
I believe this is precisely not about materials or price, but rather about stealing another company’s history and magic. It’s difficult to build 188 years of company history in an instant without lying.

Tanner favors a mindset where people wouldn’t pay solely for the logo, but would focus on quality. I appreciate this.
But who doesn’t like stories that create magic in products?
People don’t always bother to think critically, so they resort to simple decision-making models:

• “This product is expensive, so it must be high quality.”
• “This company has been making products for 188 years, so they are high quality.”
• “This product is made in France, which is known for high-quality fashion and luxury products.”
• “Royals use this brand, authority cannot be wrong.”
• “It girl women use this brand, they have money, so they only bought the best model”

It’s difficult to find a quality product from China without professional expertise, so people use simple reasoning models to save time and effort.

Tanner Leatherstein video from YouTube
Tanner seems sincere and does his work wholeheartedly. He states in the video (drumroll):
“If you’re looking for luxury bags from China at 10% of the price, you might be disappointed. Good ones can be found, but they aren’t that cheap.”

Finally:
Chinese videos criticize that luxury brands, like Hermès, charge up to 10 times the cost of materials and labor for their products.
But this is precisely the idea behind luxury products: the rich want to show that they can afford to pay for the brand, craftsmanship, and history.

Such TikTok viral trends don’t significantly affect Hermès; Hermès’ customer base is mostly Old money. And in the end, there was nothing new or surprising here; China has always made copies. China is also known for poor quality.
I don’t believe Hermès would risk its reputation by manufacturing its products in China.

[populisti]

@TurvaMarkka

They have very little debt

Hermes had a net cash position of €9.5 billion at the end of 2024. Otherwise, I completely agree with those rumors.