Two years after Hermès’ iconic Birkin bags were declared – by Baghunter, an online retailer for luxury handbags – to be a “better investment” than S&P 500 stocks or gold based on a study of annual returns over a 35-year period, Jefferies has taken on the topic. The American global investment bank and institutional securities firm stated in a note on Monday morning that a strong secondary market can support the hefty price tags on new items within the luxury sector, referring namely to Hermès’ most coveted bags.
As reported by Reuters, “The broker's analysts met with Rachel Koffsky, a specialist for luxury handbags at auction house Christie's, who told them the secondary market in those accessories had grown to 26 million pounds in 2017 from 5 million in 2011.” Hermès bags, according to data compiled by Christie's, “often offer a positive return,” says Koffsky.
For example, Jeffries reports that “one Himalaya [Birkin bag] bought in 2010 for 29,600 euros was sold – as a pre-owned bag – in 2016 for 157,500 euros.” That represents a “432 percent upswing against about 310 percent if one had bought a Hermès share at the beginning of 2010 and sold it at the end of 2016,” per Jeffries. (Hermès International SCA shares increased in value from 93.31 euros at the end of 2009 to 390.00 euros at the end of 2016).
This principal is squarely in line with what Gregory Rohan, the president of Dallas, Texas-based Heritage Auctions told the New York Times in 2014: “If you buy one Hermès bag for $20,000, depending on the popularity, the skin, the color, the size, you can resell it down the road for an average of 60 percent to 150 percent of what you paid for it."
Jefferies cautions, however, that while Hermès Birkins – and sometimes Kelly bags – may be a homerun investment, "most of the top designer handbags such as Chanel, Louis Vuitton and Gucci will (on average) depreciate in value.”