Luxury beauty shakeup: Hermès hits 1st setback

What happened Hermès reported its H1 2025 earnings with revenue rising 8% YoY to $8.8 billion (8.03 billion euros) at constant exchange rates. All geographic markets posted growth, with Japan leading at 16%. However, the pace of global growth has slowed compared to the 15% increase recorded over the same period last year. Notably, the fragrance and beauty division, typically a bright spot, posted a rare 4% decline, hitting 248 million euros ($273 million). Alongside watches, it was the only business segment to contract. The group cited a high base effect from last year’s blockbuster fragrance launches, including Hermessence Oud Alezan and Barénia, while H1 2025 saw fewer high-impact debuts, with only Terre D’Hermès Parfum and Rouge Brillant Silky lipstick being introduced. Though fragrance and beauty account for just 3% of Hermès’ total revenue, the drop is significant. It’s the first contraction since the brand launched its beauty line in 2020. From 2021 to 2024, the division grew from $447 million (385 million euros) to $628 million (540 million euros), though annual growth has gradually slowed, from 47% in 2021 to 8.7% in 2024. The Jing Take Hermès’ subdued performance in beauty raises questions about whether its discreet, craftsmanship-driven strategy is well-suited for today’s hyper-competitive luxury beauty market. While the brand has built a reputation for understated elegance and timeless appeal, beauty consumers increasingly respond to bold storytelling, celebrity-driven visibility, and product innovation. LVMH, for instance, is making an aggressive move with the launch of Louis Vuitton Beauté in collaboration with makeup icon Pat McGrath, releasing over 70 SKUs this month. Meanwhile, Kering Beauté defied sector-wide pressures to grow revenue 9% YoY in H1 2025, driven largely by the success of Creed’s women’s fragrance line. In light of this, Kering's Bottega Veneta launched its first-ever fragrance offering. ‘Quiet luxury’ meets beauty’s demand for bold storytelling In contrast Hermès has remained intentionally low-key, limiting product drops and avoiding digital fanfare. While this aligns with its house codes of rarity and restraint, it may be limiting its reach in fast-evolving markets like China, where consumers are increasingly looking for science-backed luxury, personalization, and experiential retail. Moreover, today’s beauty consumers, especially in Asia, no longer equate prestige with price and packaging alone. They seek visible efficacy, sensorial experience, and social media resonance. A single lipstick launch, however elegant, may no longer move the needle. Still, Hermès maintains industry-leading profitability, with a 41.4% operating margin, and its core leather goods and ready-to-wear segments continue to grow. The challenge ahead lies in whether the brand can infuse its beauty business with fresh energy and relevance, without diluting the heritage of quiet luxury it so carefully upholds. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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Luxury beauty shakeup: Hermès hits 1st setback