Luxury brand Hermes bags super profits in Australia; what cost of living crisis?

Fashion house Hermes has doubled its Australian profits in the past five years as appetite for its arm candy renders it impervious to the cost of living pinch.

Hermes is doing a roaring trade in Australia despite the elevated cost of everyday living. Picture: Britta Campion

For anyone able to secure a Birkin bag – much less afford one – there’s a very strong chance the cost-of-living pinch has landed like an internet knock-off.

That nonchalance is reflected in the Australian arm’s latest accounts, which show the retailer of Oran sandals, painterly silk scarfs and now cosmetics has rung up super profits more at home in an economic boom.

Hermes, which recently overtook global fashion giant LVMH in terms of market capitalisation as Europe’s largest luxury fashion house, has achieved huge local growth since the pandemic.

Hermes Australia’s results, lodged with the corporate regulator, reveal annual sales of $578.1m for calendar 2024, up 21 per cent on the $477.1m it registered in 2023.

Fans of the brand believe securing a so-called quota bag like a Kelly tends to come more easily to those with a demonstrable purchase history.

So customers are more comfortable parting with $1700 for their iconic sandals, $3000 for a picnic blanket and $8780 for small leather goods like a mobile phone case.

And while Hermes last year had to absorb an extra $95m in unexplained business costs, the Australian offshoot was still able to maintain stable profit of $104.5m.

Hermes Australia boss Karin Upton-Baker at the French luxury chain’s Elizabeth Street store in the Sydney CBD.

Helping to further fill the coffers of the parent in Paris – which in April unseated LVMH when its market cap hit €248.6 billion – was a giant leap in the dividend the Australian arm paid. Hermes Australia declared head office a dividend of $125m in 2024, which was almost double the $70m it sent back in 2023.

The long-time boss of Hermes Australia, Karin Upton-Baker, has run the French fashion and apparel business here for more than 22 years. She was unable to reached for comment on Thursday.

A spokesman for Hermes Australia said the retailer would not comment on the result.

A reportedly $66,000 Hermes Birkin bag belonging to social figure Roxy Jacenko.

Revenue for Hermes Australia in calendar year 2022 hit $388.3m, up from $297.8m in 2021 and $207.3m in 2020. In that time the business opened a new Sydney flagship store bookending the city’s luxury precinct.

It has been a similar story for Hermes overseas where it has brushed off the softer sales reported by its main luxury rivals.

Not even the threat of US tariffs has dulled enthusiasm for its fortunes with Hermes executive chairman and billionaire Axel Dumas recently saying he expected American customers to maintain their loyalty despite increased prices due to Donald Trump’s trade war.

In the US, European Union imports are on a tariff pause until July 9. If the White House follows through on its threat, French luxury goods would attract a 50 per cent impost.

Originally published as Luxury brand Hermes bags super profits in Australia; what cost of living crisis?