How to Compare Luxury Goods Companies Using Revenue Growth and Profit Margins

Compare luxury companies on the same fiscal period and margin definition, then read growth and profitability together. A fast-growing group can be destroying value if discounts, new stores or marketing are depressing margins. A company with the highest margin may be decelerating. The practical comparison is a normalized table that shows reported revenue, organic or constant-currency growth, operating margin, gross margin, the change in each measure and the business mix behind the result.

The latest disclosed figures illustrate why this matters. Hermès reported 2025 constant-currency growth of 9% and a 71% gross-margin rate, while Richemont reported 4% sales growth for the year ended 31 March 2025 but a 20.9% operating margin, down from 23.3%. Those percentages describe different fiscal periods, currencies and cost layers, so they are evidence to analyze—not a simple league table.

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What a fair luxury-company comparison measures

Start by defining the question. For shareholder reporting, use reported revenue growth because it is the number in the accounts. To assess underlying demand, add organic, comparable or constant-currency growth. Do not substitute one for the other: reported revenue includes acquisitions, disposals and currency translation, whereas an organic measure is intended to show what the continuing business did under a stated methodology.

Use operating margin against operating margin, or recurring-operating margin against recurring-operating margin. Gross margin belongs in a separate column because it stops before operating expenses such as stores, marketing, administration and research. A luxury house can have a high gross margin but a much lower operating margin after funding its retail network and brand investment.

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Finally, show both level and direction. A 25% margin falling from 30% may be less encouraging than a 18% margin rising from 14%. The change can reveal pricing power, cost pressure, investment or operating leverage that a single-year percentage hides.

Step 1: Put fiscal periods and currencies on one timeline

Label every observation with its year-end. LVMH, Kering and Hermès use calendar-year disclosures in the figures below. Richemont’s cited fiscal year ended 31 March 2025, so its results overlap two calendar years and should not be treated as a 2025 calendar-year result.

Keep the reporting currency visible. The benchmark figures are euros. If you add a company reporting in another currency, either retain its reported currency in a separate comparison or translate every period using a consistent policy and explain it. A translated series can move because of exchange rates even when local-currency demand is unchanged.

Build a two- or three-year series

Collect revenue and the matching operating-profit measure for at least three fiscal periods. Calculate revenue CAGR separately from the latest organic or constant-currency rate:

CAGR = (ending revenue ÷ beginning revenue)^(1 ÷ number of years) − 1

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For example, if revenue rises from €10 billion to €12.1 billion over two years, the CAGR is approximately 10%. Do not label that 10% as organic unless the company reports it on that basis. Put the latest reported growth and the latest underlying-demand measure in different columns.

Current benchmark figures

Sources for these figures are the companies’ cited key-figure pages, annual results and results releases: LVMH 2023–2025 key figures and its 2025 results release; Kering 2024 Annual Results; Richemont’s 2025 results for the year ended 31 March; and Hermès 2024 and 2025 results. The dates and definitions in those releases govern the numbers above.

Step 2: Separate growth quality from growth speed

Reported growth

Reported growth is the change in consolidated revenue as presented in the accounts. It is the correct starting point for understanding the size of the business and the cash-generating base, but it can be affected by currency, acquisitions, disposals and the number of weeks in a reporting period.

Organic, comparable and constant-currency growth

These labels are not interchangeable. “Comparable” often removes changes in store openings, closures or scope; “organic” may exclude acquisitions and disposals; “constant currency” removes translation effects. Read each company’s definition and retain the label in your table. Hermès’ 2025 figures show the value of doing this: growth was 5.5% at current exchange rates but 9% at constant exchange rates, a 3.5-point currency difference.

Growth by category and region

Group growth can conceal opposing businesses. Richemont’s Jewellery Maisons grew 8% with a 31.9% operating margin, while its Specialist Watchmakers fell 13% with a 5.3% margin. The group result therefore reflects mix as much as overall demand. Kering’s Houses also diverged: Gucci revenue fell 23% and its recurring-operating margin was 21.0%, while Bottega Veneta revenue rose 6% on a comparable basis with a 14.9% margin.

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Break out leather goods, jewellery, watches, fashion, beauty and other categories where disclosed. Then examine North America, Europe, Japan, China and the rest of Asia. China exposure can make a high-growth period reverse quickly, while Japan or tourism can provide a different demand pattern. A regional slowdown is not automatically a brand problem, but it changes the durability of the reported rate.

Step 3: Compare margins on a like-for-like basis

Operating or recurring-operating margin

Calculate margin as the stated operating profit divided by revenue, and use the company’s own recurring definition consistently. LVMH’s profit from recurring operations was €19.571bn on €84.683bn of 2024 revenue and €17.755bn on €80.807bn of 2025 revenue, corresponding to the disclosed 23.1% and 22.0% margins. Kering’s recurring operating margin fell from 24.3% in 2023 to 14.9% in 2024. Richemont’s operating margin fell from 23.3% to 20.9% for its March year-end comparison.

Gross margin

Gross margin is revenue less cost of goods sold, divided by revenue. It helps test pricing, product cost and mix, but it does not capture the cost of running boutiques, wholesale operations, advertising or corporate functions. Hermès’ 71% 2025 gross-margin rate cannot be ranked directly against Richemont’s 20.9% operating margin. Keep those measures in separate columns and avoid calling one company “more profitable” from that comparison alone.

Margin change in percentage points

Use percentage points, not percent change, for margin movement. A fall from 24.3% to 14.9% is a 9.4-point decline. This is easier to interpret than saying the margin fell 38.7%, which describes a different calculation.

Step 4: Explain what moved the numbers

• Mix: Jewellery, leather goods, watches and beauty have different prices, gross margins and store economics. A shift toward a lower-margin category can reduce group margin even if every category is healthy.
• Direct retail versus wholesale: Owned boutiques generally provide more control over price and customer data but carry rent, payroll and fit-out costs. Wholesale can scale distribution with less fixed retail cost but gives the company less control over presentation and discounting. Use direct-to-client share when disclosed; otherwise mark it “not stated,” not zero.
• Pricing: Price increases can support revenue and gross margin, but excessive increases may reduce units or push customers to substitutes. Separate price, volume and mix commentary when management provides it.
• Currency: Translation can lower reported revenue while constant-currency sales rise, as Hermès’ 2025 comparison demonstrates. Currency can also change the cost of materials and local operating expenses.
• Raw materials: Leather, precious metals, gemstones and watch components affect gross margin with different timing. A company may protect gross margin through pricing while absorbing higher labor, logistics or energy costs below gross profit.
• Fixed-cost absorption: New boutiques, distribution centers, technology and marketing create costs before sales reach a mature level. Falling revenue can produce negative operating leverage; recovering sales can do the reverse.
• Brand investment and restructuring: Management may deliberately accept a lower current margin to refresh a House, close stores or increase communication. Kering Chairman and CEO François-Henri Pinault described 2024 as a year of accelerating transformation and strengthening brand health for the long term. Treat that explanation as a hypothesis to test against subsequent growth and margin data, not as proof that the investment will pay off.

How to rank companies without oversimplifying

1. Normalize the period. Put calendar-year results and Richemont’s 31 March year-end on a visible timeline.
2. Build the base table. Enter reported revenue, the exact operating-profit definition, operating margin, gross margin and the year-over-year change.
3. Add underlying demand. Enter organic, comparable or constant-currency growth in its own column with the company’s definition.
4. Calculate the multi-year trend. Use revenue CAGR over two or three years, then inspect each year’s margin rather than averaging unlike measures.
5. Decompose the group. Review category, region, House and channel results. Flag material divergences such as Richemont’s jewellery and watch businesses or Kering’s Gucci and Bottega Veneta results.
6. Score durability, not just size. Prefer a business where growth is positive or recovering, margin is stable or improving, and the explanation is supported by mix, pricing and cash economics.
7. Write the risk beside the result. Note China exposure, currency sensitivity, raw-material inflation, store investment and any restructuring. A ranking without its risks is not an investment conclusion.

Reading the four benchmarks

LVMH: scale with a modest margin decline

LVMH’s disclosed revenue moved from €84.683bn in 2024 to €80.807bn in 2025, while operating margin moved from 23.1% to 22.0%. Its 2024 organic growth was 1%, so the company entered this comparison from a low-growth base. The appropriate question is whether the lower 2025 revenue and margin reflect currency, category mix, regional demand or deliberate investment; the group totals alone do not identify the cause.

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Kering: the clearest turnaround test

Kering’s 2024 revenue fell 12% to €17.194bn and recurring-operating margin fell to 14.9% from 24.3%. Gucci’s 23% revenue decline is central to the group diagnosis, while Bottega Veneta’s 6% comparable growth shows that the Houses are not moving in lockstep. Investors should therefore track House-level comparable growth and margin recovery rather than infer a group-wide trend from one brand.

Richemont: profitable jewellery offsetting weak watches

Richemont’s €21.399bn of sales for the year ended 31 March 2025 grew 4%, with a 20.9% operating margin and 66.9% gross margin. Jewellery Maisons combined 8% growth with a 31.9% operating margin; Specialist Watchmakers fell 13% with a 5.3% margin. The mix explains why a group with positive sales growth still reported a lower operating margin than the prior year.

Hermès: high gross margin and slower, still-positive growth

Hermès increased revenue from €15.2bn in 2024 to €16.0bn in 2025. Constant-currency growth slowed from 15% to 9%, while current-currency growth slowed from 13% to 5.5%. Gross-margin rate increased from 70% to 71%, and 2025 recurring operating income was €6.6bn. Because a 2025 recurring-operating margin is not stated in the cited figures, calculate it only if the corresponding revenue and profit definitions are confirmed in the full accounts; do not replace it with the gross-margin rate.

Common comparison errors and fixes

• Ranking unlike margins: Fix by labeling operating, recurring-operating and gross margins separately.
• Mixing fiscal years: Fix by displaying each year-end and treating March-year results as a timing difference.
• Calling currency-driven growth organic: Fix by showing reported and constant-currency rates side by side.
• Using a group average to explain a House: Fix by checking category and brand disclosures.
• Ignoring denominator changes: Margin can rise because revenue falls less than costs, or fall because a high-margin category shrinks. Inspect both profit and revenue.
• Assuming a high gross margin means high operating profitability: Fix by including stores, marketing, administration and restructuring costs through operating margin.
• Treating management commentary as evidence of success: Fix by testing the stated strategy against later revenue, comparable growth and margin outcomes.

A reusable worksheet

What “best” means for a personal-finance reader

There is no universal winner. A conservative comparison may favor a company with resilient demand, a stable operating margin and limited reliance on one region or House. A turnaround investor may accept falling current margins if the balance sheet, brand investment and evidence of comparable-sales recovery justify the risk. A growth-focused investor may prioritize constant-currency momentum, but should ask whether the margin can absorb new stores, wages and marketing.

Use the table to form a testable view: which company has the strongest underlying growth, which protects operating profitability, and which has the clearest explanation for any deterioration? Revisit the same measures after the next results release rather than changing the method to fit the latest headline.

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Frequently Asked Questions

Should I use reported or organic growth when comparing luxury companies?

Use both. Reported growth measures the consolidated business shareholders own; organic, comparable or constant-currency growth helps isolate underlying demand. Keep the labels and company definitions separate.

Can I compare Hermès’ 71% gross margin with Richemont’s 20.9% margin?

No. Hermès’ figure is gross margin, while Richemont’s is operating margin. Gross margin excludes operating expenses that operating margin includes, so place them in separate columns.

Why does Richemont’s positive sales growth coexist with a lower operating margin?

Its Jewellery Maisons grew 8% with a 31.9% operating margin, while Specialist Watchmakers fell 13% with a 5.3% margin. The mix and weaker watch performance reduced group profitability despite overall sales growth.

How should I handle Richemont’s March year-end?

Label it as the year ended 31 March 2025 and do not treat it as a calendar-year 2025 result. Align the dates on a timeline before calculating multi-company trends.

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