The factors in favour of a rise in the Hermes share price:
Of course, the Hermes group's first strong point is the company's positioning in the luxury sector. Indeed, Hermes has succeeded in making itself known throughout the world by developing its network of boutiques in different markets. This represents a real achievement for this primarily family-owned company specialising in luxury goods.
The distribution of Hermes' sales worldwide is also one of the company's advantages. Hermes currently generates more than 32% of its sales in Europe, but also reaches highly coveted markets such as Japan and the Americas, with a strong presence in the United States in particular. The Group also has a strong presence in the Asian market in general and therefore in emerging markets.
Hermes also benefits from a variety of important products that touch almost every area of luxury. Indeed, it is one of the most diversified brands in this sector of activity, with varied product ranges such as leather goods, high-end fashion clothing and accessories, silk and high-end textiles, but also perfumes, tableware and watches. It is thus well protected from the risks associated with a single sector of activity and can diversify its sources of revenue while increasing its presence in the luxury goods world in general.
The Hermes group and more specifically the brand associated with it also has the advantage of being timeless in that it is particularly classic and its image is timeless. Thus, the group suffers very little from the effects of fashion and variable economic contexts that most other companies in the sector are subject to.
Thanks to its strong reputation, Hermes is also able to present a very important negotiating force with its suppliers and distributors. In particular, it can adopt price increase policies by positioning itself solely at the top end of the market and secure its supplies and distribution channels, notably through a very well thought-out policy of actively buying out concessions. These strategies enable it to sustain comfortable margins whatever the economic context.
Over the last twelve years, the Hermes group has attracted investors with consistently positive results and steady growth in profits, which explains the rise in the share price we mentioned earlier in the historical technical analysis. It is indeed the best historical performance in the sector.
Finally, the financial health of Hermes' corporate structure should of course be emphasised, which gives it many advantages, such as the possibility of significant investment in its distribution networks, but also regular share buybacks and the payment of a large interim dividend.