Hermès CEO: The Walmart Birkin is ‘detestable’
Hermès CEO Axel Dumas implied he will use legal action to fight the makers of dupes like the $80 Walmart Birkin, nicknamed “the Wirkin.”
A good rule of business reporting is that the most interesting things are usually at the end of the report or the interview. That proved to be the case in the Hermès 2024 earnings call this morning, when the company’s CEO Axel Dumas said in the last few minutes that the “Walmart Birkin,” a popular sub-$100 dupe of the brand’s famous Birkin handbag, was “detestable.”
“Making a copy like that I find pretty detestable… because it’s stealing the creativity of others,” he said in the last few minutes of the earnings call, in response to a question from Claire Bouleau of French financial news publication Challenges.
The company will “fight it with all means,” he said, adding, “we have very strong teams, we’re quite good at [fighting] counterfeits,” he said. The Fashion Law previously reported that the Wirkin could potentially provoke legal action by Hermès, in an article that explored the legality of buying and selling them.
Dumas was careful to reserve his criticism for the makers of the dupe, not the customers, and he said his reaction to consumers buying them to be “quite touching… quite moving.”
He imagined that perhaps the people who wanted a Wirkin might one day afford a real Hermès Birkin. He believed that they were not buying the dupes maliciously and Wirkin buyers were merely saying they want to be part of his brand’s world.
“There was no person who bought this dupe thinking that [they] were buying a product equivalent to [a real Birkin],” he added.
Dumas also savvily used the emergence of artificial intelligence as an analogy to explain his view on dupes, saying that everyone is talking about AI, and “‘oh they’re going to copy all my articles’,” he said, referring to the possible fear of some of the journalists in the room.
He equated this example — AI firms ripping off journalists’ work — with dupe makers stealing his company’s intellectual property and copying it.
Regular Dark Luxury readers will know that dupes have a dark side. Cheap dupes can only be made profitably by cutting back on labour costs and materials.
We quickly found negative comments about the Wirkin which pierced the social media narrative that it was a great deal. Reviewers found “dangerous” bits of wire in their bag, and who said it was made of cheap materials and was missing accessories.
You might not be able to afford a real Birkin, but that doesn’t mean buying a cheap knockoff is a great idea either, even if you know it’s cheap and fake.
Will Hermès buy another luxury brand?
Hermès 2024 results reconfirmed that it is one of the brightest spots in luxury right now, reporting financial results well above analyst expectations with quarterly sales up 18 per cent.
The company is seriously outshining its closest rivals LVMH and Kering, as shown by the leap in the company’s share price, which puts it within £50 billion of LVMH’s total value.
That’s an extraordinary achievement for a brand that was once a takeover target for LVMH CEO Bernard Arnault. His attempt in 2010 was blocked by the Hermès family in 2013, leading to LVMH paying fines for failing to disclose its stake. (One of the strange consequences of this period was that about €12 billion worth of Hermès shares reportedly went missing afterwards.)
The incredible success of Hermès has left it flush with cash. The company is sitting on a €12 billion pile of cash, almost an entire year’s worth of revenue (that’s about €15 billion).
What will it do with all that money? Dumas says he has no “immediate” plans to buy another brand, and he says he will maintain its current strategy, namely to use spare money conservatively.
Dumas says Hermès has a rule of thirds investment approach: one third on “investments,” one third for value sharing with employees and one third for cash reserves, “for more difficult periods, which will inevitably come.” What he meant by investments is left for the listener to guess.
However, this strategy is another clear contrast with the current largest luxury group, LVMH, which has long relied on acquisitions to grow. And it appears to be working.
DEI isn’t dead at Hermès
LVMH’s earnings report had six more mentions of biodiversity than it did mentions of actual diversity in its human workforce. So it’s interesting to see Hermès put the promotion of diversity and tackling climate change so high up in its earnings report. On the third page of its earnings document, under the heading “A responsible and sustainable model,” the company boasted:
In line with its ambitions to promote diversity, Hermès reaffirms its commitment to the inclusion of people with disabilities. As a result, the direct employment rate has reached 7.12% in France, doubling in 5 years.
Business of Fashion says that some fashion brands are “negotiating a new approach to diversity, equity and inclusion for the Trump era.” Not Hermès, apparently, at least in its earning reports.
Online curiosities and the ruthless side of Hermès
Has there ever been such a mysteriously run public company? Underneath a charming layer of quirky Parisian joie-de-vivre is an organisation that is ruthless in its control of the supply of its famous leather bags.
The company’s system of control is well documented in this Glitz Paris report, which says, “Maintaining exclusivity requires extreme secrecy regarding stock levels, tight control over distribution channels, and rigorous oversight of sales staff, who are constantly courted by impatient customers and second-hand platforms alike.”
That courting creates financial opportunities for the company’s staff. Sales employees in the London Bond Street store are reportedly charging potential customers “up to £5,000” for the chance to secure one of the brand’s most popular items, the black Birkin Togo. This popular design can sell for over £20,000 on the secondary market and tends to keep its resale value.
Hermès reportedly doesn’t pay commission on sales, which, as we know from our reporting on LVMH and Louis Vuitton, is a hot button issue with staff.
Securing access to Birkins is also the subject of a now infamous lawsuit by two Hermès customers who are suing the brand, alleging that to purchase bags they first needed to spend thousands on other products.
The Hermès game
The draw of the brand is so strong that there are thriving communities online dedicated to securing bags and spotting them in the wild. The Hermès game Reddit page has more than 36,000 members and features photos taken surreptitiously inside boutiques (where photography is barred) and gossip related to the various intrigues and kremlinology of the brand and its sales practices.
A sample post from the page:
“I am currently in Paris and was at FSH [Faubourg Saint Honoré] .. My SA [sales assistant] told me that now you are allowed only 2 Qouta bags a year any where in the world .Also Constance is now considered a Qouta Bag .And also only one croc a year .Have you heard of the same ?. She offered me a Constance 24 Noir GHW alligator which i rejected .”
There are also scores of popular TikTok, Youtube and Instagram accounts dedicated to the bags. One popular TikTok account, angelllboys, run by two former Hermès sales associates, has accumulated more than 211,000 followers who all can’t get enough of their Hermès bag-spotting posts (and satirical videos about living the high life). Amy Oddell’s interview with the pair for her popular Retail Confessions series shows the extraordinary lengths clients will go to in order to woo sales associates.
What other gifts would clients lavish upon the SAs [sales assistants]?
They used to take people out for dinner. A lot of them had private planes. They’d invite people on the private planes. You'd have to go through the boutique manager. I don't think the SA [who was invited by a client] was actually allowed to go on a private plane to the Cannes Film Festival — it was just too extravagant.
Then there’s the masterclass in coquettish charm and Orwellian double-speak from Hermès artistic director Pierre-Alexis Dumas in a 60 Minutes interview in December, during which he claimed that his company’s products were “costly” but not “expensive”. Amy Odell fact checked some of the more contentious claims.
Coming up on Dark Luxury
If we get the ok from our lawyers, we’re hoping to publish two scoops in the next week. One is a follow-up to our reporting on the Chinese gangs story in January, and another is a shocking tale of rampant crime related to one the luxury industry’s most iconic brands.
If you’re a reader, stay tuned. If you’re a journalist who wants to cover these stories, drop us a line. And if you’re interested in giving us a story tip, our email inbox is open. Or you can contact us via encrypted messaging service Signal at conradqh.14
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Want to read the full Hermès earning call transcript?
Here are the abbreviated Hermès earnings results in English, as released by the company.
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