Two luxury French brands are going through striking differences with Louis Vuitton ramping up production while Hermes struggles to keep pace with its fellow label.

Louis Vuitton, which is the largest luxury label in the world and part of LVMH – Louis Vuitton and Moet Hennessy Louis Vuitton, has scheduled to open up two new sites before the end of the year in order to ramp up production in France. On the other hand, Hermes is opening three new factories as it wrestles to keep up with the demand for some of its products – most notably their Birkin and Kelly handbags.

“We are at the end – I hope – of an economic crisis, I hope a geopolitical crisis won’t reach us – but we’ve managed to get through this crisis in a stronger position,” said LVMH boss Bernard Arnault during an inaugural visit to two new leather goods workshops in Vendome and Aze, France, bringing the label’s total to 20 in France.

The vicious demand for European fashion and accessories has seen a sharp rise in sales at the luxury brand. French President Emmanuel Macron has said that the fashion and luxury industry grew to become the country’s biggest exporter last year.

Burke, who was also sat alongside Macron and Arnault said that Louis Vuitton has been selling more trunks than any year in the 19th century, citing “extraordinary growth” in the sales of the label’s historic product to Americans, Chinese and Koreans. “We needed a dedicated workshop for exotic [products],” he added, referring to the new site in Vendome. 

In contrast, Hermes International reported lower revenue from its leather-goods division which sells the Birkin bag, and is facing difficulties meeting the demand for items such as Kelly bags, with the latter becoming harder to find in shops. The company will boost production capacity with new sites in the French towns of Louviers, Sormonne, and Riom through 2024. A leatherworking school they opened in September will also assist in the recovery. 

The company already employs 4,300 leatherworkers, and it hires more than 400 artisans a year. The demand for its handbags skyrocketed thanks to the COVID-19 pandemic, causing stock markets to surge which gave the world’s richest people much greater disposable income, and Hermes said it would take much more steps to keep up with its demand.

“We are facing high demand and we have a very handcrafted product,” said Hermès CEO Axel Dumas. “It takes 15 hours [to create] a Hermès bag. Even if the demand is high, I will not start in 13 hours to ramp up production.”

Dumas ruled out price increases and said that there are often long waiting lists for bags. “Contrary to popular belief, we are always very sad when we have to say no to our customers because we don’t have it,” said Dumas. 

The lack of handbag inventory led to a 5.4% decline in fourth-quarter sales in the leather goods and saddlery division, which accounts for nearly half of total sales. The news sent Hermès shares down 7% on Friday, before recovering slightly to a 5% drop in what was still its biggest one-day drop since 2016.

Published by: HOLR Magazine.