Hermes scarcity model faces pressure as Birkin resale premiums fall

Traders Union
All News
Business & Wealth
Companies
Birkin resale premiums drop

Highlights

Resale prices for unworn Birkin 25 bags have dropped by around 4,000 pounds since 2022, with average secondary-market premiums falling from 2.6x to 1.7x retail.
UBS downgraded Hermes to sell this month, citing secondary-market Birkin and Kelly supply now six to seven times pre-pandemic levels and potential weakening of the scarcity model.
Hermes is expected to report 5.2% quarterly sales growth Thursday, its slowest in six years, despite 10% expected leather goods revenue growth according to Visible Alpha.

Resale prices weaken as supply expands

As reported by Reuters, resellers, consultants and analysts say growing availability of Birkin bags in the secondary market is pushing down resale prices and narrowing profits for traders who once benefited from steep premiums.

London-based reseller Cai Baochun, who began selling Birkins online in 2020, says he has stopped stockpiling the bags as values fall. He says the resale value of unworn Birkins sold online has dropped by more than $6,000 from its 2022 peak.

Nine Birkin resellers interviewed across the U.S., Europe and Asia present a mixed but broadly weaker picture, with six saying resale prices have fallen over the past year and five reporting softer demand. Antoinette Hunter, founder of luxury handbag reseller Lilac Blue, says an unworn black Birkin 25, one of the most sought-after models, has fallen by around 4,000 pounds since 2022 to about 24,000 pounds, while Cai says his own asking price is around 20,000 pounds.

Hermes sells the same model for 9,390 pounds in Britain, according to a London sales assistant cited in the report. Brokerage Bernstein says in a September note that the resale price on Birkin 25 bags averages about 1.7 times retail in the third quarter, down from about 2.6 times at the 2022 peak.

Luxury sector implications for Hermes

For years, limited supply and strong demand created a profitable cycle for both Hermes and resellers, as buyers were often willing to spend heavily on scarves, clothing and shoes before getting access to a Birkin or Kelly bag. Two resellers estimate customers typically spend $10,000 to $20,000 before being offered one of the handbags, though practices vary by store and region.

That model matters because Hermes' leather goods division generates 44% of annual group revenue. Between 2015 and 2025, the group's annual sales triple to 16 billion euros, while last year Hermes posts an operating margin of 41%, above rivals including Chanel, Gucci and LVMH's leather and fashion division.

Analysts are now questioning whether that scarcity-led engine is becoming harder to sustain. UBS earlier this month downgrades Hermes shares to sell, saying growing secondary-market supply of Birkins and Kellys could weaken the brand's business model, and estimates the number of handbags listed for sale worldwide is now six to seven times higher than before the pandemic.

Hermes has gradually expanded production, opening one workshop per year on average, while platforms such as Vestiaire Collective and The RealReal make resale easier. The company is expected to report quarterly sales growth of 5.2% on Thursday, which would be its weakest quarterly growth in six years, according to Visible Alpha estimates, even as leather goods revenue is still expected to grow by 10%.

Hermes declines to comment on the story and does not disclose its selling policies or production volumes for Birkin bags, which it says take 15 hours to craft. In July, CEO Axel Dumas says output depends largely on the number of trained artisans and the supply of high-quality leather.

Not all sellers see a downturn. Sarah Davis, founder of Fashionphile, says prices for the bag on her platform remain firm and have even edged higher this year, helped by renewed attention linked to Norwegian soccer player Erling Haaland's handbag collection.

UBS’s forecast for a longer Federal Reserve tightening cycle highlighted how persistent inflation could keep borrowing costs elevated for longer than markets had expected. Our earlier article noted that stronger goods and services inflation was pushing expectations toward additional rate hikes, with rate futures increasingly pricing a higher-for-longer policy path. That backdrop matters for consumer-facing sectors as tighter financial conditions can cool discretionary demand and reshape pricing power across markets.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.