Hermès Unable to Meet Growing Demand for Scarves and Handbags

The growth in demand for luxury goods was expected but the volume of growth at the very high end of the product range has caught the luxury brands unawares. Hermès, one of the oldest luxury fashion houses from France is finding it difficult to meet the soaring demand for £500 silk scarves and £6,000 handbags. The company has declared a 50% jump in the profits for the first six months of the year. Its Kelly and Birkin handbags are witnessing unprecedented demand in the US and Japan.

Patrick Thomas, CEO, of Hermes is a worried man today because he is totally out of stock and is unable to meet the growing demand. The company has hired 400 new employees to give a boost to production. With its customer base expanding the company has planned the opening of ten new stores. Their bags have been named after Grace Kelly and Jane Birkin by the former Hermès boss Jean-Louis Dumas. The prices for their bags start at $10,000 but can go up to $150,000. Their customer ranges from the queen to Kate Moss.

Prices of their other products are also significantly higher than competing brands. Men’s toweling beach shorts sell at £345 a pair and gold “Collier de Chien” bangles carry a price tag of £4,190 each. No doubt, the financial results of the company were very good and as a result the stock prices of Hermes shares have climbed 69%. LVMH, the luxury conglomerate had mounted a hostile takeover bid for Hermes by building up a 21% stake in the company but the Hermes family that owns 62% together, closed ranks and fought off the bid to retain its autonomy and identity.

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