Between 2023 and 2026, the luxury industry went through its worst stretch in more than a decade outside the pandemic. Sales fell at Gucci, Saint Laurent and LVMH’s fashion division, tens of millions of shoppers left the market, and executives across the sector rewrote their strategies. Hermès kept growing.
In 2025, the Paris house passed €16 billion in revenue for the first time, with an operating margin of 41%. In April of that year, it overtook LVMH to become Europe’s most valuable luxury company. This report explains how Hermès did it: its history, how it makes its products, how it prices them, how its family kept control, and where its business is now under pressure.
The key numbers
- €16.0 billion: Hermès revenue in 2025, up 8.9% at constant exchange rates.
- 41%: its recurring operating margin in 2025.
- €6.7 billion to €16.0 billion: the growth in its annual revenue between 2019 and 2025.
- 16 to 18 hours: the time one artisan spends making a single Birkin or Kelly bag.
- 24: the number of Hermès leather goods workshops in France as of September 2025, with more planned through 2030.
- 66.72%: the share of Hermès held by the family holding company H51 as of March 2025.
- €248.2 billion: Hermès’s market value on April 15, 2025, when it overtook LVMH.
Part 1: A harness maker becomes a luxury house
Hermès was founded in Paris in 1837 by Thierry Hermès as a workshop making harnesses and saddles for horse-drawn carriages, according to the company’s history as summarised by Wikipedia. In 1880, his son Charles-Émile moved the business to 24 rue du Faubourg Saint-Honoré, which remains its headquarters.
As cars replaced horses, Hermès applied its saddle-making skills to bags, luggage and accessories. Its first silk scarf, the carré, appeared in 1937. In the 1950s, one of its handbags became known as the Kelly after Grace Kelly was photographed carrying it.
The house’s most famous product came about by chance. In 1984, Jean-Louis Dumas, then head of Hermès, was seated next to the actress and singer Jane Birkin on a flight from Paris to London. A conversation about her need for a practical bag led the two to design the Birkin.
Jean-Louis Dumas led the company from 1978 to 2006 and is widely credited with turning it into a global brand. Hermès listed on the Paris stock exchange in 1993, although the family kept control. Patrick Thomas became the first leader from outside the family, and in 2013 Axel Dumas, a sixth-generation descendant of the founder, took charge. He remains executive chairman.
Part 2: The numbers through the slowdown
Hermès has grown far faster than the luxury market. Its revenue was €6.68 billion in 2019. It reached €13.43 billion in 2023 and €15.17 billion in 2024, according to company figures.
In 2025, as most of the industry stagnated, Hermès reported revenue of €16.0 billion, up 8.9% at constant exchange rates and 5.5% at current rates, according to its full-year results. Recurring operating income rose to €6.57 billion, a margin of 41.0%, up from 40.5% in 2024. Net profit was €4.52 billion, slightly lower than in 2024 because of an exceptional French levy on large companies. Excluding that charge, it would have risen 5.5%. The company ended the year with €12.8 billion in net cash.
For comparison, Gucci’s sales fell about 22% in 2025, LVMH’s fashion and leather goods revenue fell 5%, and Chanel grew 2% after a 4.3% decline in 2024, according to Reuters.
Growth in 2025 came from almost every region. At constant exchange rates, sales rose 15% in the Middle East, 14% in Japan, 12% in the Americas, 11% in Europe outside France and 9% in France. Asia outside Japan was the weakest region, at 5%.
Leather goods and saddlery, the division that includes the Birkin and Kelly, grew 13%. Jewellery and home products grew 11%, ready-to-wear and accessories 6%, and silk and textiles 5%. Watches fell 2% and perfume and beauty fell 8%.
Part 3: The craft model
One artisan, one bag
At the heart of Hermès’s business is how it makes its bags. Each Birkin or Kelly is made from start to finish by a single artisan, rather than on a production line. A bag takes 16 to 18 hours of work, and a Kelly is made from 36 pieces of leather, according to Hermès executive vice-president Guillaume de Seynes, speaking to The National in October 2025. Hermès has chosen not to split production into specialised steps, and each bag carries a mark that identifies who made it.
The bags are sewn with a saddle stitch, a technique from the house’s harness-making origins, in which two needles pass through the same hole from opposite directions. Seams are then finished with beeswax, according to The RealReal.
Training its own artisans
Because its methods take years to learn, Hermès trains its own craftspeople. In 2021, it founded L’École Hermès des savoir-faire, which runs an 18-month course recognised by the French Ministry of Education and leading to a CAP vocational diploma. Students learn basic leatherwork, then a specific model, usually the Kelly, before moving into a workshop.
According to La Conceria, trainees learn under the supervision of about 200 designated tutors, and Hermès has about 80 master trainers, a role that takes eight years to reach. Axel Dumas has said trainees learn a complete craft rather than a single task. The company pays starting salaries well above the French minimum wage and offers share plans, and more than a quarter of its French staff have worked there for over 15 years.
A network of small French workshops
Hermès makes its leather goods in France, in workshops it keeps to around 300 people each to preserve what de Seynes calls a family spirit. More than 7,000 people work on leather goods. In September 2025, Hermès opened its 24th leather goods workshop, in L’Isle-d’Espagnac in the Charente region, which will eventually employ 260 artisans making Birkin and Kelly bags and small leather goods, according to FashionUnited.
Further workshops are planned in Loupes (2026), Charleville-Mézières (2027), Colombelles (2028) and Les Andelys (by 2030). Hermès had 26,494 employees at the end of 2025, including 16,349 in France, after adding more than 1,300 jobs during the year. It makes 55% of its products in its own workshops, and Axel Dumas credits the company’s vertical integration and exclusive distribution network for its results.
This model sets a natural limit on how quickly Hermès can grow. It cannot make more bags without training more artisans and building more workshops, which takes years.
Part 4: Scarcity, by design or by craft?
Demand for Hermès’s most famous bags far exceeds supply. Birkins and Kellys are rarely displayed in stores, and many customers report being offered one only after building a relationship with a sales associate and buying other products.
Hermès says this scarcity is not deliberate. De Seynes told The National that scarcity is neither a goal nor a policy for the company, but a result of its insistence on quality and handwork.
The practice has been tested in court. In March 2024, three California residents filed a class action alleging that Hermès required customers to buy other items before they could buy a Birkin or Kelly, in breach of US antitrust law. Hermès argued that the market definitions were artificial and that scarcity reflected demand exceeding supply. In September 2025, federal judge James Donato dismissed the federal claims with prejudice, finding that the plaintiffs had not adequately defined the market or shown that Hermès had market power, according to nss magazine.
Scarcity also supports Hermès bags on the secondary market. De Seynes noted that Hermès bags consistently outperform rivals at auction, and Birkins are widely described by resellers as holding their value unusually well.
Part 5: A different approach to pricing
Hermès prices differently from many rivals. De Seynes told The National that the company does not set prices based on what the market will bear, but calculates its costs and adds a margin. He cited his grandfather’s distinction between something being costly and being expensive.
The result has been more restrained price increases on its signature bags than at some competitors. Wall Street Journal analysis cited by The Fashion Law found that increases in the price of the Birkin 30 between 2019 and 2024 were smaller than US inflation over the same period. Over roughly the same years, Chanel’s medium Classic Flap nearly doubled in price, and the Birkin’s price premium over the Chanel bag fell from about 70% to about 2%.
Hermès does raise prices every year. In early 2024 it raised prices globally by 8% to 9%, which added more than $1,000 to the cost of a Birkin, and it raised them by 6% to 7% at the start of 2025. It says it raises prices to offset rising manufacturing costs. In April 2025, it announced an additional US price increase from May 1 to fully offset a new 10% US tariff, according to FashionUnited. Axel Dumas had said Hermès would raise prices rather than move production to the United States if tariffs increased its costs. Read our report on why luxury got so expensive.
Part 6: Family control and the battle with LVMH
Hermès’s independence is central to its strategy, and it was seriously challenged between 2010 and 2014.
LVMH, the world’s largest luxury group, took a 4.9% stake in Hermès in 2001 and 2002. From 2007, it built a larger position through equity derivatives held via intermediaries, which kept its holdings below disclosure thresholds. On October 23, 2010, LVMH surprised the market by announcing that it held 14.2% of Hermès, according to a timeline compiled by The Fashion Law. LVMH said it had no plans for a takeover.
The Hermès family responded by pooling its shares. In December 2010, family members set up a holding company, which became known as H51, controlling just over 50% of the company and holding a first right of refusal when family members sell. French regulators allowed the family to pool its holdings without making an offer to minority shareholders, effectively ruling out a hostile takeover.
LVMH continued to buy shares, reaching about 23% by 2013. In 2012, Hermès filed a criminal complaint alleging insider trading and share price manipulation, and LVMH countersued. In 2013, France’s markets regulator, the AMF, concluded that LVMH had secretly built its stake and fined it.
In September 2014, after a court mediated between the two companies, LVMH agreed to distribute its roughly 23% stake to its own shareholders and not to buy Hermès shares for five years. The distribution was completed on December 17, 2014.
Today H51 holds 66.72% of Hermès, according to the company’s shareholder data as of March 2025. Family control allows Hermès to take a long-term view, investing in workshops and training that take years to pay off, without pressure to deliver short-term growth. De Seynes told The National that three cousins sit on the company’s executive committee.
Part 7: Overtaking LVMH
Just over a decade after the takeover battle ended, Hermès overtook LVMH by market value. On April 15, 2025, after LVMH reported a 3% fall in first-quarter sales and its shares dropped as much as 8%, Hermès was valued at €248.2 billion against LVMH’s €246.8 billion, according to Fortune. Hermès became the most valuable luxury company in Europe and the largest company on France’s CAC 40 index.
The milestone was notable because LVMH’s revenue, at €84.7 billion in 2024, was more than five times larger than Hermès’s. Investors valued Hermès at a far higher multiple because of its consistent growth and margins. Analysts at Jefferies described Hermès as a relative safe haven in the sector at the time.
Part 8: The weak spots
Hermès has not been immune to the slowdown. In the first half of 2026, revenue rose 6.1% at constant exchange rates to €8.16 billion, but only 1.6% at current exchange rates because of currency movements, according to FashionUnited. Net profit was broadly flat.
Growth slowed further in the third quarter. Revenue for the three months to September 2026 rose 4.3% at constant exchange rates to €4.1 billion, below analyst expectations of 5.2% and well below the 9.6% growth of a year earlier, according to The Impression. Sales in Asia outside Japan were flat, with weakness in Greater China, and the Middle East fell 4.5%.
Some categories have struggled. In the third quarter, ready-to-wear and accessories fell 2%, watches 6% and jewellery and home 1.1%. Perfume and beauty, which fell 8% in 2025, grew 7.5% in the quarter.
The core business held up. Leather goods and saddlery grew 10.8% in the third quarter to €1.91 billion, and sales rose 8.8% in the Americas, 9.6% in Japan and 7.2% in Europe. Hermès’s recurring operating margin for the first half of 2026 was 41%, and it held €12.3 billion in net cash at the end of September.
Part 9: What comes next
Hermès is investing in new creative directions. Axel Dumas has pointed to the January 2027 debuts of Grace Wales Bonner’s first men’s ready-to-wear collection for the house and Nadège Vanhée’s couture line. Hermès has reaffirmed its medium-term goal for strong revenue growth at constant exchange rates, while noting continued economic and geopolitical uncertainty.
Its growth will continue to depend on its craft capacity. New leather workshops are scheduled to open each year from 2026 to 2028, with another by 2030, and its watchmaking site in Le Noirmont, Switzerland, is due to expand by 2028.
Why Hermès held up: a summary
- Craft as a limit on supply: one artisan makes each bag over 16 to 18 hours, so production can only grow as fast as Hermès trains new artisans.
- Demand above supply: its signature bags are consistently in short supply, which supports full-price sales and resale values.
- Cost-based pricing: Birkin price increases ran below US inflation between 2019 and 2024, while some rivals doubled their prices.
- Control of production and distribution: vertical integration and its own store network.
- Family ownership: H51’s two-thirds stake allows long-term investment and ended LVMH’s takeover attempt.
- Weak spots: slowing growth in Asia and the Middle East, and weaker watches and ready-to-wear sales in 2026.
Sources: Hermès 2025 full-year results; FashionUnited, H1 2026; The Impression, Q3 2026; Wikipedia; The National; The RealReal; La Conceria; FashionUnited, workshops; nss magazine; The Fashion Law, pricing; The Fashion Law, LVMH timeline; FashionUnited, US prices; Fortune; Reuters via RTÉ.
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