Thursday, 6 February 2020

With lipsticks, Hermès branches into competitive cosmetics world

France's Hermès said on Wednesday it would start selling make-up from March, as the brand best known for its pricey Birkin handbags branches into a competitive beauty industry where its luxury rivals include Chanel.

Hermès, which already sells perfumes, will make its first foray into cosmetics with lipsticks and will add other products over time.

The roll-out adds more accessible ranges to a company known for bags that can sell for over $10,000 (7,691 pounds), while cosmetics are often a highly profitable sideline for fashion firms.

High-end make-up and skincare products have outperformed lower end ranges at beauty firms like L'Oreal or Estee Lauder in recent years, thanks in part to buoyant Chinese demand for branded wares, anti-aging treatments, and other luxury creams.

But make-up sales are starting to slow globally and particularly in the United States, several firms in the sector have noted, while competition from upstart brands has risen, with celebrities like singer Lady Gaga also entering the fray.

Prices for Hermès' lipsticks will start at 62 euros for one of the refillable lacquer tubes, developed in-house and made at a partner factory. Many fashion labels like Italy's Armani or Kering-owned Gucci tend to contract out the production of their entire cosmetics under license to the likes of L'Oréal or Coty.

Originally a saddle maker, Hermes - which ranks just behind Gucci, privately-owned Chanel, and LVMH's Louis Vuitton as one of the biggest luxury brands in the world by sales - makes most of its money from leather accessories.

The group, which reported a 10% rise in comparable annual sales to almost 6 billion euros in 2018, will publish 2019 earnings on Feb. 26.

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