Hermès International Société en commandite par actions

What does it do?

Hermès is the French luxury house behind the Birkin bag — one of the most famous and coveted handbags in the world, with waitlists that stretch years and prices starting around $10,000. But it's not just bags. Hermès also makes silk scarves, men's and women's clothing, shoes, jewelry, and even homeware, all under the same orange-box brand. The company was founded in 1837 as a harness maker for horses, which is why you still see horse motifs everywhere and why their leather craft is considered the gold standard. Think of it as the opposite of fast fashion — everything is made slowly, by hand, in France, and that scarcity is the whole point.

How does it make money?

Hermès made $16 billion in revenue in its latest fiscal year, up from $15.2 billion the year before — roughly 5% growth while many luxury peers were flat or declining. The biggest revenue driver is leather goods and saddlery, which includes the iconic Birkin and Kelly bags, and typically accounts for around 40-45% of total sales. Ready-to-wear clothing, silk scarves, perfumes, watches, and homeware make up the rest, spread across a network of company-owned stores in cities like Paris, Tokyo, New York, and Shanghai. Because Hermès owns its full retail chain and manufactures almost everything in France, it keeps margins exceptionally high — turning $4.5 billion of that $16 billion into net profit (profit after all costs), which is a net margin of roughly 28%.

Why do investors care?

The core investment idea is simple: Hermès makes things people want more because they're hard to get, not less. Raising prices doesn't kill demand — it often reinforces the brand's status, which is rare and valuable. The growth story depends on expanding the global wealthy population, especially in Asia, where Chinese consumers remain a major buyer of high-end goods even as China's broader economy slows. For the thesis to fully work, Hermès needs to keep control of its supply — it's actively building new leather workshops in France to grow production without diluting the craftsmanship story — and it needs to hold the line on exclusivity as it scales.