The “Apple of the luxury goods industry” can really do no wrong.
Despite the fact that people still aren’t spending the way they were back in 2006–and might not ever–Hermès has seen sales jump 23% over the first half of 2010, thanks to a surge in the Asian market.
And the company believes that the second half of the year will exceed analyst expectations.
The reason behind Hermès’ steady success? Well, good products that never really date help. But so does a high operating margin. Hermès products cost the consumer a lot more than they do to make. While a silk twill scarf for $200 might seem like a steal for an Hermès-branded item, it’s also making the company a good chunk of cash. Same with higher-priced items like the Birkin. There may no longer be a “waiting list” for the coveted bag, but it’s still in high demand, and the profit margin is major.
What’s the lesson for luxury brands that want to some day be on Hermès‘ level? Sell things that people will always want to buy, regardless of the circumstances.