Hermès Beats Forecasts, Buys on Rodeo Drive

- The record-breaking Rodeo Drive acquisition involved two adjoining properties at 338 North Rodeo Drive, currently occupied by Tom Ford, Moncler, and Balenciaga. This purchase represents the most expensive retail real estate transaction in Beverly Hills since at least the early 2000s. - Hermès' full-year 2025 revenue exceeded €16 billion, a 9% increase at constant exchange rates, with recurring operating income reaching €6.6 billion. The recurring operating profitability margin improved to 41% for the year. - Growth was geographically balanced, with the Americas seeing a 12% increase in 2025 sales and Japan growing by 14%. In the fourth quarter, sales in the Americas rose 12.1%, outperforming expectations. - The Leather Goods and Saddlery division, which includes the iconic Birkin and Kelly bags, saw sales grow by 13% in 2025, driven by strong demand and increased production capacity. To meet this demand, Hermès continues to open new workshops in France. - Following the strong results, the company proposed a dividend of €18 per share. This comes as Hermès plans for a price increase of 5-6% in 2026, a slight moderation from the 6-7% increase in 2025. - The brand's strategy of owning key retail locations is not new; it purchased its current Rodeo Drive store at 434 N. Rodeo Drive in 2011 for $75 million, which was its first U.S. real estate acquisition. Owning properties provides total control over brand presentation and customer experience, a core part of the Hermès strategy. - In a move to share the benefits of its growth, Hermès announced it will give a €3,000 bonus to all its employees worldwide for the 2025 year. - Despite a broader slowdown in the luxury sector that has affected competitors like LVMH and Kering, analysts note that Hermès' focus on its wealthiest clients and managed product scarcity has allowed it to weather market softness more effectively.