Core Viewpoint - The global luxury goods industry is facing significant challenges, potentially experiencing its largest setback in 15 years, as indicated by Bain & Company. Despite this, Hermès continues to show growth, although it faces increasing difficulties in customer acquisition and reliance on leather goods [4][6]. Financial Performance - Hermès reported an 8% revenue growth to €8 billion, with all geographic regions showing growth, except for the perfume and beauty and watch sectors [4][5]. - In the first half of 2024, Hermès achieved a 15% growth, with double-digit growth across most regions, except for a slight decline in the watch sector [5]. Market Challenges - The company is struggling with the challenge of attracting new customers and is affected by the second-hand market disrupting pricing strategies. The reliance on leather goods is becoming increasingly problematic [6][20]. - The second-hand market has shown that Hermès products can sell for more than retail prices, indicating a strong demand but also a shift in consumer purchasing behavior [12][14]. Sector Performance - The leather goods sector saw a revenue increase of 12.4%, while the ready-to-wear and silk sectors experienced a decline in growth rates, with ready-to-wear growing only 5.5% compared to 15.5% the previous year [21]. - The perfume and beauty sector saw a decline of 3.8%, while the watch sector dropped by 7.9% [21]. Geographic Performance - The Americas market is becoming increasingly important for Hermès, with a 9.5% growth in the first half of 2025, while the Asia-Pacific region only grew by 1.5% [30][31]. - Growth in Japan has slowed from over 22% in 2024 to 16% in 2025, and the overall growth in the Asia-Pacific region has significantly decreased compared to previous years [30][31]. Pricing Strategy - Hermès plans to continue raising prices globally, but has already implemented a 5% price increase in the U.S. to counteract tariff impacts [28][29]. - The company is facing pressure to adjust its pricing strategy due to rising costs of raw materials, particularly in the jewelry sector [33]. Future Outlook - The importance of diversifying product lines is emphasized, as reliance on leather goods may not sustain the company in the long term. The company is looking to expand into high-end fashion to create a second growth curve [24][34]. - The decline in middle-class consumers willing to spend on entry-level products poses a risk to Hermès' customer base [36].