Hermès has been slammed for allegedly coercing clients to buy other products, to hopefully get a chance to buy the famed Birkin bag.
ADVERTISEMENTFrench luxury brand Hermès has recently been hit with a federal class-action lawsuit in California, over allegations that the company only let clients with enough purchase history buy its coveted Birkin handbags.
This is against antitrust laws, especially as Hermès has been accused of coercing clients to buy several other of its items such as jewellery, scarves and shoes to gain enough purchase history for a chance to buy a Birkin.
The Birkin bag has long been seen as the pinnacle of fashion, with a months-long waiting list and a price tag running into thousands of dollars per piece, with some going for millions as well.
Prized for its superior craftsmanship, design and exclusivity, the supply of Birkin bags is highly limited and controlled, adding to its allure.
This means that they are not usually available in-store or online, with the company hand-picking the customers who get the first pick, making it even more of an achievement to bag one.
The class action seeks to support thousands of US customers, with the plaintiffs attempting to get a court order, which will compel Hermès to curb these practices. However, the exact amount of monetary damages asked for is still unknown.
Hermès has also faced backlash previously due to the living conditions of the crocodiles and alligators, whose skins the brand uses for its products.
Dampened luxury goods sentiment hits Gucci too
Kering, the owner of Hermès rival Gucci, which is due to report first-quarter 2024 earnings on 23 April, has also recently warned about falling Gucci sales in Q1. This is mostly expected to be due to declining Asia-Pacific, especially Chinese sales, with consumers still shying away from pricey luxury items, amidst the higher cost of living.
Kering said in a statement, “In a first half that Kering expected to be challenging, current trends lead the Group to estimate that its consolidated revenue in the first quarter of 2024 should decline by approximately 10% on a comparable basis, from last year’s first quarter.”
“This performance primarily reflects a steeper sales drop at Gucci, notably in the Asia-Pacific region. Gucci comparable revenues in the first quarter are expected to be down by nearly 20% year-on-year,” the company said.
Following the warning, Kering’s shares dropped 14% on Tuesday, as investors worried about the company’s ability to keep up with rivals LVMH and Hermès, which have done relatively well, despite economic difficulties.
Earlier in February, Kering also revealed falls in Q4 2023 revenue, with Gucci also seeing reduced sales, along with Kering’s other big brands, such as Balenciaga, Yves Saint Laurent and Alexander McQueen.
The outlook for Chinese sales of luxury goods is cautiously optimistic for now, as the economy still struggles with the lingering effects of the pandemic, long lockdowns and a considerably weakened real estate sector. However, with international travel slowly picking up again, luxury goods producers are hopeful that sales should soon follow too.
