Key Highlights from the 2025 Financial Reports
The 2025 financial results for Hermès International demonstrate a year of robust growth and resilience despite an uncertain global economic and geopolitical landscape.
• Financial Performance: Revenue exceeded the €16 billion mark, representing a 9% growth rate at constant exchange rates (5.5% at current rates). Recurring operating income rose by 7% to €6.6 billion, with recurring operating profitability reaching 41%, an increase of 0.5 percentage points from the previous year.
• Regional Growth: Performance was sustained across all geographical areas. Japan (+14%) and the Americas (+12%) showed excellent momentum, while Europe (+11%) and France (+9%) were supported by loyal local customers and tourism flows. Asia excluding Japan grew by 5% over the year, with a stronger 8% growth in the fourth quarter.
• Division Results: Leather Goods and Saddlery, the group’s largest division, grew by 13% due to high desirability and increased production capacity. Other high-performing sectors included the “Other” division (Jewellery and Home), which rose 11%, and Ready-to-wear (+6%). Conversely, Perfume and Beauty (-8%) and Watches (-2%) saw lesser performance.
• Investment and Capacity: Hermès made €1.2 billion in operational investments in 2025. This included the inauguration of the 24th leather workshop, L’Île des Pagnacs, and continued work on new sites in Loupe, Charleville-Mézières, and Colombelle to secure long-term supply and production.
• Social Commitment: The group created 1,300 new jobs in 2025 (800 in France) and announced a €3,000 bonus for each of its 26,000 employees worldwide.
• Sustainability: Environmental efforts led to a 69% reduction in Scope 1 and 2 emissions (in absolute value) and a 58% reduction in Scope 3 intensity compared to 2018.
• Dividends and Outlook: A proposed ordinary dividend of €18 per share will be submitted for approval. Looking toward 2026, the group plans price increases of 5% to 6% to offset rising production and labor costs.

Hermès International 2025 Full Year Results and Strategic Outlook

Executive Summary

Hermès International delivered robust financial results for the 2025 fiscal year, surpassing the €16 billion turnover mark with a 9% growth rate at constant exchange rates. Despite a year characterized by geopolitical and economic uncertainty, the group maintained a recurring operating profitability of 41%, supported by a gross margin of 71.1%. Performance was driven by sustained demand across almost all geographical regions—notably Japan (+14%) and the Americas (+12%)—and the continued strength of the Leather Goods and Saddlery division (+13%).

The group continues to execute a long-term strategy centered on vertical integration, craftsmanship, and a “multi-local” distribution model. Key strategic highlights include the creation of 1,300 new jobs, the inauguration of the group’s 24th leather workshop, and a planned 5% to 6% price increase for 2026 to offset rising production and labor costs. Hermès remains financially independent with a net cash position of €12.8 billion, allowing for continued investment in production capacity through 2030.

Financial Performance Overview

The 2025 fiscal year was marked by solid progression across key financial metrics despite significant negative exchange rate effects totaling €500 million due to the depreciation of the dollar, yuan, and yen.

Key Financial Metrics (2025)

Operating Expenses and Dividends

• Communication Expenditure: Reached €620 million (3.9% of sales).
• Dividends: An ordinary dividend of €18 per share is proposed for 2025, representing a 39% payout (excluding exceptional taxes). An interim dividend was paid in February 2026.
• Taxation: Net profit was impacted by an exceptional tax contribution for large French companies, totaling €330 million, which equivalent to a 5-percentage point increase in the effective tax rate.

Regional and Divisional Analysis

Geographical Performance

All regions recorded growth, sustained by loyal local customer bases and a recovery in tourism flows in Europe.

• Japan (+14%): Remained a standout performer due to high local loyalty and an exclusive retail network.
• Americas (+12%): Performance was described as “excellent,” with broad momentum across the United States.
• Europe (+11%): Flagged by solid progression in Italy and Northern Europe, driven by both local demand and tourism. France specifically grew by 9%.
• Middle East & Others (+15%): Represented the highest growth rate among the regions.
• Asia excluding Japan (+5%): While slower than other regions, it maintained “beautiful performance” across all countries despite economic headwinds in China.

Division Performance

The “Leather Goods and Saddlery” division remains the group’s primary pillar, though management emphasized a strategy of balancing desirability across all “métiers.”

• Leather Goods and Saddlery (+13%): Growth was supported by increased production capacity and high desirability of core models.
• Ready-to-Wear and Accessories (+6%): Confirmed dynamic movement; jewelry and home products also saw strong gains (+11%).
• Silk and Textiles (+5%): Progressed through diversification of formats and materials.
• Perfume and Beauty (-8%): Underperformed, attributed partly to inventory management by distributors in duty-free channels.
• Watches (-2%): Faced a difficult first half but recovered with growth in the second half of the year.

Strategic Pillars and Operations

Vertical Integration and Production

Hermès continues to invest heavily in securing its supply chain and expanding French-based production.

• Leather Capacity: In 2025, the group inaugurated its 24th workshop, L’Île des Pagnacs. New workshops are scheduled for Loupe (2026), Charleville-Mézières (2027), Colombelle (2028), and Andely (2030).
• Other Divisions: Investments are underway for a new tableware site in Crousy and increased capacity in watchmaking.
• Craftsmanship: Management noted that a single bag requires approximately 16 hours of manual labor. 60% of the group’s headcount consists of craftspeople.

Distribution Strategy

The group follows a “multi-local” strategy, focusing on the quality and size of stores rather than the quantity.

• Store Count: The network stands at 297 stores, down from 313 several years ago, reflecting a shift toward larger flagships.
• Major Projects: New stores were opened in Scottsdale and Nashville in 2025. Significant upcoming projects include a new “Maison” on New Bond Street in London (scheduled for June 16, 2026) and a large project in Rodeo Drive, Beverly Hills.
• Empowerment: Store managers retain the freedom to procure specific SKUs (out of 50,000 active items) to meet local demand, a practice described as unique to Hermès.

Human Capital and CSR

Workforce and Social Commitment

• Job Creation: 1,300 new jobs were created in 2025, with 800 based in France. Over three years, the group has added 62,000 jobs.
• Employee Rewards: Hermès announced a general wage increase of €120 for French employees and a €3,000 bonus for each of its 26,000 employees worldwide.
• Education: The group operates 12 “Hermès de Savoir-Faire” training schools to preserve craftsmanship.

Environmental Responsibility

• Emissions Reduction: Scope 1 and 2 absolute emissions have been reduced by 69% compared to 2018. Scope 3 intensity has dropped by 58% over the same period.
• Sustainability Ratings: Hermès remains on the CDP “A list” and received high marks from non-financial rating agencies for transparency and environmental performance.

Market Dynamics and Future Outlook

Market Sentiment: China and the U.S.

Management characterized the current global environment as a return to “21st-century” norms, where localized crises (real estate, geopolitical, or health-related) occur every few years, necessitating a geographically balanced strategy.

• China: While there is a drop in “aspirational” customers, high-value divisions like leather goods, jewelry, and women’s ready-to-wear remain solid. Management noted that luxury appetite in China is currently tied more to the stock market and real estate stability than to pure GDP growth.
• United States: The market remains highly resilient with broad-based growth across all divisions and regions.

2026 Projections

• Pricing: A price increase of 5% to 6% is planned for 2026 to cover industrial cost prices, labor increases, and currency fluctuations.
• Labor Costs: Production costs are expected to rise due to the €120 bonus and general wage increases implemented in France.
• Currency Effects: Management anticipates exchange rate effects will remain unfavorable in 2026, with a projected negative impact of €200 million on hedging.
• Growth Algorithm: The group aims to maintain a volume growth of approximately 6% to 7% in leather goods, constrained by the time required to train new craftspeople (approximately eight years to achieve full proficiency).

“Our volumes are quite low… as long as we can strike the right balance, there will be desirability. The idea is not to have more stores, but better stores.” — Axel Dumas, Executive Chairman