HERMÈS OPENS 3 NEW FACTORIES TO FULFIL INCREASING DEMAND FOR LUXURY BAGS

Hermès, a French luxury goods maker, has announced it will open three new factories as the company struggles to keep up with demand for luxury handbags worth £5,000 on average (about $6,794). 

Hermès opens 3 new factories to fulfil increasing demand for luxury bags / ph: Hermès

Hermes' latest announcement on February 18 said that the company plans to open new leather factories in the French towns of Louviers, Sormonne and Riom before 2024 to speed up production.

Recently, Hermes also opened its first leather school to train more craftsmen in the art of handbag making.

The company, which already employs above 4,300 people in the leather business, says it is hiring over 400 craftsmen a year.  However, Hermes still needs more workers to meet demand for its bags, which has skyrocketed during the pandemic as the booming stock market helps the wealthy increase their disposable income.

Hermes bags have become a must-have for the super-rich. Additionally, rare edition bags often appear at auction, with some bags selling for nearly £300,000.

A lack of handbag supply led to a 5.4% drop in sales in the fourth quarter of 2021 for the leather goods division, which accounts for almost half of Hermes' total sales which made Hermes’s stock price down 7% on Friday, before recovering slightly and closing the session with a 5% decreasing level. But it's still the stock's biggest one-day drop since 2016.

Hermes' slowing growth contrasts with the rise of other luxury goods groups as LVMH, the world's largest luxury brand, which has already achieved better than expected results.