Hermes Shares Drop as Birkin Resale Premiums Decline
Hermes faces a market value decline as increased supply and softening demand erode the scarcity appeal and resale premiums of Birkin bags.
The resale market for Birkin bags is experiencing a significant decline in premiums, eroding the scarcity appeal that has historically driven the business model of Hermes. Resellers report that second-hand prices for unworn models have dropped sharply from 2022 peaks, with some specific models falling by more than $6,000.
This shift in the secondary market has impacted the company's financial standing, with Hermes shares losing nearly 40% of their market value this year. UBS analysts recently downgraded the company's shares to "sell," citing the growing supply of bags in the secondary market. Platforms like Vestiaire Collective and Fashionphile have contributed to this increased availability, with the latter reporting a 32-fold growth in Birkin listings over the last 15 years.
Hermes CEO Axel Dumas has defended the company's approach, stating that production levels are determined by the availability of high-quality leather and trained artisans rather than a strategy to manipulate exclusivity. Despite these challenges, the leather goods division remains a primary revenue driver for the luxury house.
