Hermès Faces Sell Ratings as Growth Outlook Dimishes

Hermès International SCA, known for its iconic Birkin and Kelly handbags, has received its first sell ratings in over a year from analysts at Goldman Sachs and UBS. The luxury brand, which has long been seen as a resilient player in the sector, is now facing warnings that its impressive growth phase may be ending.

The company’s shares dropped by as much as 3%, adding to a year-to-date decline of over 40%. This decline is on track to be the worst annual performance since Hermès went public in 1993. Goldman Sachs analysts, led by Erwan Rambourg, noted that the company’s long streak of double-digit growth is likely over. They highlighted weakness in non-leather products, which are more reliant on aspirational shoppers.

UBS analyst Zuzanna Pusz pointed to increased availability of Hermès products on the resale market as a potential vulnerability. The company’s valuation premium over its luxury peers has already shrunk significantly, with its stock now trading at about 27 times forward earnings, less than half its multiple from early 2025.

The next critical test for Hermès will come with the release of its third-quarter results in mid-October. Analysts expect the company to report the slowest revenue growth since 2020, with a projected 6.82% increase at constant exchange rates, reflecting the broader challenges facing the luxury sector.