The Mystery of the $234 Hermès Tie

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Maintaining Exclusivity

So far the company has been adept at managing this growth. As Tommy Fazio, men's fashion director at Bergdorf Goodman, points out, "Hermès has been very, very cautious of their expansion. They are very particular about their locations, how they are merchandized, how they are presented." Bergdorf is the only department store in New York that sells Hermès products. In addition to the Madison Avenue shop, there is also a new store that opened in the Wall Street area in July, 2007.

Although the company does not break out individual revenues for tie sales, ties are the company's third most important category, after bags and scarves, and they're growing steadily. Other areas such as leather goods, tableware, and ready-to-wear are growing just as fast. In fact ties are among the most affordable items to be found in an Hermès store, where a Birkin bag starts at $7,500 and an English saddle at $5,400.

This kind of snob appeal pays off. On March 20, the company announced that its profits rose 7.5% in 2007. Net income also increased to €288 million ($449 million) from €268 milion in 2006, beating analysts' estimates.

An Enduring Status Symbol

Bergdorf's Fazio is seeing growth in sales of luxury ties, including Hermès; and Marshall Cohen, an analyst at Port Washington (N.Y.)-based retail marketing consultant NPD Group, believes Hermès shouldn't be worried that today's twentysomethings don't wear ties now. "As the older generation retires and stops wearing ties, that thirtysomething generation will come in and start wearing them" as they assume positions of responsibility.

Regardless of what it charges, Hermès understands that its well-heeled clientele are happy to keep buying its ties—and scarves and saddles and suits and handbags—for as long as they continue to perceive the brand as the sine qua non of luxury and status. But for those looking for a relative deal on pricey French neckties, as so many other visitors from Asia and Europe have already discovered, the U.S. is looking more like a discount mart all the time.

Click here to see how much prices for Hermès ties vary in 22 markets around the world, from New York to New Caledonia.

Nick Passmore is an independent wine writer and consultant based in New York. For five years he contributed a widely read monthly wine column to Forbes.com, in addition to which his work has appeared in such publications as Forbes, Discover, Town & Country, the Robb Report, the Wine Enthusiast, Saveur, Sky, and Golf Connoisseur. He is currently Artisanal Editor for Four Seasons magazine and contributes the Nick Passmore: Wine of the Week column to BusinessWeek.com. He is also a judge at the widely respected annual Critics' Challenge wine competition.