Birkin Is Workin’

Image source: Debu55y - Shutterstock

What's going on?

Luxury giant Hermès gets that bag, reporting bumper quarterly sales on Thursday.

What does this mean?

Fashionistas the world over know there’s nothing quite like a Birkin bag, but that uber-desirable tote is just one of many offerings being snapped up in Hermès stores right now. The French haute couture fashion house was propelled to success by two key factors last quarter: one was that Covid restrictions eased in parts of China, letting affluent shoppers throng to the country’s many Hermès stores. The other was that US shoppers made use of the strong dollar to live out lavish Emily in Paris fantasies on European soil. That helped Hermès grow its total revenue – excluding the effects of currency swings – by over 24% last quarter versus the same time last year, around double what analysts expected.

Why should I care?

The bigger picture: Nice for some.
Hermès results are more evidence that luxury brands are largely immune to the spending squeeze that’s hurting other retailers. Just look at high-end rival LVMH, owner of the Louis Vuitton and Christian Dior brands:  it announced stellar results of its own last week, with affluent consumers – less impacted by the cost-of-living crisis – still shelling out on nice-to-haves while the rest of us scrimp and save. Given that, you’d be brave to bet against Gucci-owner Kering when it posts results this week.

For you personally: It’s a rich man’s world.
It might sound hard to believe, but global financial wealth actually grew 10.6% last year – the fastest growth in more than a decade, and equal to an extra $26 trillion in wealth (tweet this). That’s part of the reason we’re seeing a boom in luxury spending – and while most of us don’t have a spare $10,000 lying around to buy a fancy handbag, you could still benefit from the trend by investing in the key players. Case in point: Hermès and LVMH’s stocks have outperformed the S&P 500 by around 8% so far this year.

Originally posted as part of the Finimize daily email.

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