The French luxury design house Hermès has long been synonymous with timeless elegance, particularly renowned for its leather goods, silk scarves, and the iconic Birkin bag. While the luxury sector has recently reported widespread low profits for the first half of 2024, Hermès International (RMS.PA) defied the trend with a 15% increase in turnover, reaching €7.5 billion. So, what are the secret ingredients to Hermès's recent success, and can other brands replicate this in the second half of the year?

Brands’ historical and cultural weight have always been a useful indicator to predict how they will survive difficult economic climates within the fashion markets, and Hermès is certainly one of the major international players with serious clout. Founded in 1837, Hermès has always been defined by its high-quality luxury goods. Initially, the brand crafted high-quality bridles, harnesses for carriages, and saddles for horses. Over the decades, Hermès evolved towards fashion, especially handbags. The Hermès Birkin bag, first designed in 1984, is a global symbol of wealth, owned by New York rappers to Hampstead Heath millionaires.

Yet, no brand can rely on simply an impressive history. One reason for Hermès’s survival is their focus on leather goods, a sector currently less affected by the luxury market downturn. It is theorised that leather goods resonate with consumers unlike other luxury goods, such as clothing. A significant amount of time and craftsmanship is required to make a leather handbag in comparison to some luxury fashion houses’ clothing. During uncertain economic times, consumers will typically choose high-quality, hand-crafted goods that have a timeless appeal. Leather items such as handbags, wallets, and purses feel physically more valuable due to simple factors such as weight and frequency of wear, rather than clothes that could fall out of fashion faster and with fewer wears.

Management teams within Hermès also deserve some of the praise. Reports highlight the company’s exceptionally well-oiled production and meticulous stock management systems, which significantly reduce waste and inefficiencies. This does not imply that other luxury brands are careless, but rather that leather goods are more conducive to a slower turnaround time.

The present state of international markets have significantly played towards Hermès’s strengths. In the Asian market, Chinese consumers have been purchasing Hermès products in Japan, taking advantage of the weak Yen to maximise their spending power. Additionally, the Chinese market has shifted its preference towards more subtle, "quiet-luxury" items, moving away from overtly branded and glitzy products.

Hermès has found itself in an ideal situation in the first half of this year, but only time, and the will of the consumer, can tell if this will continue. Learning from Hermès, it appears that the fashion forecast for the rest of the year is one centred around quiet luxury, high-quality design, and timeless products.

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