It’s no surprise that Hermes know how to make a must-have bag. From the Hermes Birkin to the Kelly and every other bag they’ve ever made, each one has been spotted on the arms of the world’s elite and are a certified status symbol.
And now the storied French fashion house has introduced yet another bag for us to lust after: The Kelly Mini II.
The new style is smaller than the iconic classic Kelly and bigger than the Kelly Micro, making it an essential for any collector. This new Mini II is an ideal day-to-day size, and can be worn on the shoulder, cross body or top handle so you’re never stuck for options.
We’d say it’s only a matter of time before North West is rocking one.
— There are signs the fashion company’s safe-haven status may be breaking down
The luxury downturn finally seems to be catching up with Hermes.
The doyen of French fashion is genuinely exclusive: With the apparent exception of certain celebrities, there is a waiting list to buy its iconic Birkin and Kelly replica handbags. That has insulated it from the demand vacuum that has hit other purveyors of luxury goods such as Cartier-owner Richemont, which said Wednesday that its profits for the six months to September would be 45% below the prior year’s level.
Safe-haven status may even have benefited Hermes replica in the storm. Its shares exchanged hands for 36 times forward earnings last month, according to FactSet—the highest since speculation of a takeover by LVMH died down in 2012.
But now there are signs the model is breaking down. In half-year results released Wednesday Hermes dropped its official “medium-term” goal of growing revenues organically by 8% a year—even though that was its growth rate in the most recent quarter.
One plausible explanation, albeit one the hermetic company would never confirm, is that its fabled waiting list is running thin. Recent results have been increasingly dependent on double-digit growth in the flagship leather-goods business, which accounts for roughly half of total sales. Sales are shrinking for the accessories Hermes devotees used to buy in an effort to get higher up the waiting list for a Birkin—such as jewelry and scarves.
The shares plunged 7% Wednesday morning, bringing the forward earnings multiple down to 32 times. But the correction may have further to run. If replica Hermes can no longer count on discretely releasing more handbags to support its growth profile, it will become more like other luxury-goods groups. The stock of sector bellwether LVMH trades on 18 times forward earnings.
This may be a good time to buy a Hermes bag if you covet one. It probably isn’t a good time to buy Hermes shares.