theJR

Hermes: Luxury Retailer Almost Immune to Financial Crisis

HaHa!

Ok, firstly Hermes (like all the other luxury houses) is definitely feeling the burden of a downturn. However, as they primarily sell through their own shops, it becomes almost entirely a PR game to maintain the image of doing well in a downturn.

You can well see this by their announcement to increase the scarcity of the Birkin bag (showing it has well passed it's peak in sales). Around two weeks ago, they announced that the waiting list period would increase from two years to three years.

This manipulation for the benefit of claiming scarcity is a marketing tool that few others in the category are able to access, mainly due to over indulgence in global own brand stores (think LV). If Louis Vuitton were still a luxury brand, they would surely follow suit, alas they are a hollow shell of a brand consumed by one Frenchman's greed...

As for Hermes, this is entirely a perception game which they have proven to be masters of up to this date. How else could US$2.45 billion worth of handbags be perceived as "exclusive."

I have owned Hermes stock now for around eight months, and will sell it in Sept. (before Q3 results are announced). Expect a zero to minus one announcement for Q2, then minus four to five for Q3. Ending with a minus eight in Q4.

I have no knowledge of this, other than being absolutely sure that they are currently purchasing their own bags - at retail prices - from their own shops. Happy trading!