Europe

Setting the Bar at the Highest Height


British singer Jane Birkin, sans bag, in 1968

Photograph by S. E. Orchard/Express via Getty Images

British singer Jane Birkin, sans bag, in 1968

Speculation that LVMH Moët Hennessy Louis Vuitton SA (MC:FP) may ultimately buy the company and a shortage of freely traded stock has inflated Hermes’s share price, according to HSBC’s Antoine Belge. Descendants of Hermes’s founder hold about 69 percent of the shares, individually or collectively. Excluding LVMH’s stake and other long-term holdings, the free float is only 6 percent, according to Exane BNP Paribas’s Luca Solca.
—Andrew Roberts, “Hermes $10,000 Birkin Purse Seen Leading to Record Sales,” Bloomberg News, Feb. 11, 2013

Costs escalate according to the type of materials
Birkin bag, Wikipedia

There are so many lessons to be learned from Hermes International (RMS:FP) as to be uncountable. Start with the obvious quality wins to the Econ 101 law that scarcity wins and the Madison Avenue maxim that brand-nurturing wins.

This summarizes to 15+ percent-per-year for the past decade. ($2,306 invested a decade ago would purchase your Birkin purse this day, taxes, shipping and matching scarf not included.) Reporter Roberts! Purse!

It’s a bag.

Birkin bags, like Hermes bow ties, are gorgeous and overpriced in a “So what?” kind of way. Bonus: The bag is named after the unspeakably beautiful Jane Birkin.

Read Andrew Roberts’s brilliant clinic on quality.

We live in an era of average. It is a decade of dumbing down. We may laugh at the price, but this is true: Thank you, Hermes, for setting the bar at the highest height. Discuss.

Keene hosts Bloomberg Surveillance 7-10 a.m. ET on 1130 AM in the New York metro area and nationally on SiriusXM 113.

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Companies Mentioned

  • MC:FP
    (LVMH Moet Hennessy Louis Vuitton SA)
    • $140.35 EUR
    • 1.00
    • 0.71%
  • RMS:FP
    (Hermes International)
    • $269.25 EUR
    • 4.05
    • 1.5%
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