Hermès International SCA was hit with its first sell ratings in more than a year, as analysts at Goldman Sachs Group Inc. and UBS Group AG warned the Birkin-maker’s era of impressive growth is coming to an end.
Hermès – Facebook
The Paris-based company’s shares fell as much as 3%, extending this year’s decline to more than 40%. The stock is on course for its worst annual performance since going public in 1993.
Goldman Sachs analysts led by Erwan Rambourg said Hermès’ years-long run of double-digit growth has ended. They see weakness in non-leather products, which rely more on aspirational shoppers. “While we believe its top-line growth is likely to remain slightly ahead of that of its peers, we expect it will prove more muted than investors have become accustomed to,” Rambourg noted.
The calls challenge Hermès’ reputation as one of the luxury sector’s most resilient companies, built on long waiting lists for its Kelly and Birkin handbags and tightly controlled supply. Zuzanna Pusz, an analyst at UBS, sees cracks in that defence, pointing to greater availability of the firm’s products on the resale market.
Hermès’ valuation premium over luxury peers has already shrunk sharply. The stock now trades at about 27 times forward earnings, less than half its multiple in early 2025.
The next test comes when Hermès reports third-quarter results in mid-October. Analysts tracked by Bloomberg expect full-year revenue at constant exchange rates to grow 6.82%, the slowest pace since 2020, when pandemic-related store closures hit the industry.
