Hermès Experiences Its Most Challenging Quarter in Years as Luxury Market Struggles Continue
The maker of the Birkin bag is anticipated to announce its lowest quarterly revenue growth since late 2021.
Hermès, known for its resilience amidst challenges that affect its luxury counterparts, is likely to reflect the industry’s slowdown in its third-quarter results.
“Hermès’ undisputed lead in luxury shopper resilience faces its biggest test of recent quarters,” said Bloomberg Intelligence analyst Deborah Aitken.
UBS analyst Zuzanna Pusz noted that even Hermès may not be impervious to the declining trends in Chinese demand. The waning interest in luxury goods has intensified, evidenced by the third-quarter sales decline of LVMH, and consumer confidence in China has reverted to pandemic-era lows, as pointed out by Aitken.
Hermès’ organic revenue growth in Asia-Pacific, excluding Japan, is estimated to have slowed to 2.3 percent this quarter, down from 10.2 percent in the same period last year, based on analysts’ projections. It is likely that both the silk and textiles division and the watches segment experienced a decline in sales, perpetuating the downward trend that began in the second quarter.
In the second quarter, Hermès surpassed its competitors, even as LVMH fell short of revenue growth forecasts and Burberry Group Plc issued a profit warning. However, the resilience of Hermès, often attributed to its devoted clientele and unique pricing, is now under scrutiny.
The cost of a Hermès bag can vary significantly depending on the model, size, and materials used. Here are some examples:
- Hermès Birkin Bag: Prices for a new Birkin bag typically range from around $10,000 to $56,000. The exact price depends on the size and the type of leather or exotic skin used.
- Hermès Kelly Bag: The Kelly bag, named after Grace Kelly, usually costs between $8,000 and $50,0002, again depending on the size and materials.
- Other Models: Smaller Hermès bags, like the Herbag Zip 31, start at around $3,050.
Nevertheless, the market has seen the release of several exclusive, limited edition products over the years. Here are some:
Sac Bijou Birkin: In 2012, Hermès revealed an exquisite line of handbag-inspired jewellery within the Haute Bijouterie Collection, designed by Pierre Hardy, the creative director of fine jewellery at Hermès. The highlight was the Sac Bijou Birkin, valued at approximately $2 million USD. Crafted from rose gold and adorned with 2,712 diamonds, this miniaturized Birkin doubles as a functional bracelet. Its top flap features a crocodile skin texture, and diamonds embellish its body, handles, touret, cadena lock, and clochette. With only three diamond-encrusted Sac Bijou Birkins ever made, it stands as an extraordinarily rare piece. In 2019, a new version was introduced, featuring black garnets and spinels for a more modern twist on the original diamond design.
Birkin Faubourg: The Hermès Faubourg Birkin stands as one of the most coveted limited edition Birkin bags. Released in 2019, it pays tribute to the iconic Hermès store on Rue du Faubourg Saint-Honoré in Paris. The bag showcases three windows with orange awnings, a shopping bag-shaped clochette, a matte alligator skin flap, and handles of the same material. The petite Birkin 20 initially came out in Brown (Day) and Blue (Night). Two more hues, White (Snow) and Black (Midnight), were introduced in 2021. The Snow Birkin Faubourg, in white, emerged as the priciest, fetching upwards of $300,000 in 2022. A Midnight black Birkin Faubourg recently reached over $160,000 at our Paris Auction in September 2023. As of 2024, a pristine white Faubourg is valued between $220,000 and $230,000.
Diamond Birkin: The Diamond Birkin bag, adored by Hermès enthusiasts, is akin to the Diamond Birkin Himalaya, with the only difference being the treatment of its exotic skin. As a coveted collector’s piece, this Hermès bag boasts crocodile skin complemented by diamonds set in white gold hardware. Available in the iconic Birkin sizes of 25, 30, 35, and 40 centimeters, Diamond Birkins are offered in a variety of colors such as pink, red, brown, black, among Hermès’ extensive color palette. The price of Diamond Birkins varies based on size and color, with secondary market values observed by Sotheby’s ranging from $65,000 to $200,000, not including the Diamond Himalaya variant.
Birkin Himalaya: The Himalaya Birkin is available with and without diamonds. The Diamond Himalaya version is renowned for being the most expensive handbag ever auctioned. In 2022, a Diamond Himalaya Birkin 30 fetched over $450,000 USD at Sotheby’s. Crafted from Niloticus crocodile skin with a white and grey gradient, the bag’s coloration is designed to mimic the snow-capped Himalayan peaks. This is complemented by 18-karat white gold hardware adorned with white diamonds. The cadena lock alone consists of 68.4 grams of 18-karat white gold and 40 white round brilliant diamonds, totaling 1.64 carats. Additionally, over 200 diamonds are set into three structural elements of the Birkin—the Touret, the Pontets, and the Plaques de Sanglons—accumulating to 8.2 carats. These luxurious materials augment the crocodile skin’s stunning hue. Himalaya Birkins, known for their craftsmanship, are coveted by collectors and command high demand, diamond-encrusted or not. They typically command higher secondary market prices than other crocodile Birkins, influenced by the bag’s condition and age. In 2021, the Himalaya Birkin 25 was highly sought after, selling for over $300,000 at Sotheby’s. By 2023, the most coveted Himalaya Birkin 25 in pristine condition was valued at around $200,000. Meanwhile, the Birkin 30 Himalaya sold for close to $150,000 in similar condition, with older, more worn bags going for near $100,000.
Birkin Metallic: The Hermès Metallic Birkin bag, a limited edition released in 2005, is available in silver and bronze. This opulent handbag is on the smaller side, with a base measurement of 25 centimeters. The silver variant features palladium hardware accents, whereas the bronze version boasts gold hardware.The most expensive Metallic Silver Hermès Birkin 25 sold $139,230 in April 2022.
These prices reflect the exclusivity and craftsmanship associated with Hermès bags, making them not only luxury items but also potential investments.
