Hermes can’t keep up with its bag demands

Credit crunch? Pah! Hermes can’t keep up with the demand for its £150,000 handbags.

The luxury label has reported a 50% increase in profits for the first half of the year due to huge demand for its Kelly and Birkin bags in the US and Japan, and has had to employ nearly 400 new members of staff to keep up.

But chief executive Patrick Thomas has warned that Hermes’ lucky streak is likely to slow, since it’s running out of stock and all.

“We haven’t yet seen a reduction in the number of people coming into our shops, not even in Japan [following the earthquake and tsunami disaster]“, Thomas told the Guardian.

“The trend is still very good, but is lower than that of the first half. This is not at all due to a drop in the number of people in our stores. There are stores where we are a little tight on stocks. This isn’t an alert. It’s not serious. We are selling at the rate we are producing.”

So, given that an Hermes handbag starts at £10,000 but can cost anything up to £150,000, is there something about the economic climate we don’t know?