Two more banks just told clients to sell Hermès. And the reason should worry the whole industry. Fashion Business Daily. Frasers Group throws itself a luxury party in Paris, The Limited comes back as a license, and Cue runs out of road in Australia. First, the Birkin maker, and a word nobody at Hermès likes hearing: cyclical. Hit follow so tomorrow's briefing shows up on its own.
Navamya Acharya, writing in Investing.com:
UBS said investor expectations still rely heavily on strong leather-goods growth, but that outlook is becoming less dependable as Hermès expands. The bank estimates non-quota bags now account for about 65% of leather-goods sales, reducing the exclusivity that has supported demand.
UBS moved Hermès to sell from neutral this morning and cut its target to 1,168 euros from 1,695. The shares closed Friday, October 2, at 1,299.50, the bottom of their 52-week range. These are analyst numbers, not company guidance. UBS cut its earnings-per-share estimates for 2027 and 2028 by 10 and 11 percent, and its 2027 forecast sits 11 percent below consensus. Sixty-five percent of the leather goods aren't quota bags. That's the whole thing. Hermès sold the idea that you can't just walk in and buy one. If mostly you can, it's just a very expensive bag. And UBS isn't alone. GuruFocus reports Goldman Sachs also went to sell, with analyst Elwan Lamblin saying the era of double-digit growth appears to be over, mainly on weaker non-leather goods. UBS's Susanna Pusch also points to more Hermès supply on the secondhand market, and resale profits normalizing. That's the resale tell. When flipping a Birkin stops paying, the waitlist mystique goes with it. Thursday it was Rothschild Redburn, mostly on China. Now the question is whether scarcity itself is wearing thin. Per Zonebourse, UBS also cut its Kering target to 224 euros from 285. And LVMH reports third-quarter revenue next Monday, October 12. Boerse-global says it closed Friday at 381.20 euros, down 40 percent this year. That's the next real number.
Lucy Maguire, writing in Vogue, interviewing Frasers Group CEO Michael Murray:
We come along, buy the business, and then we are expected to pay all their bills. How unfair is that? I say to the brands, look, please manage your own credit risk. Obviously, I want to be a good partner, but I can’t be Father Christmas as well.
Context. Frasers hosts a 500-guest party during Paris Fashion Week tonight for Frasers Group Luxury: Flannels, The Webster, and Harvey Nichols, bought in August for an undisclosed sum. As with Matches, some industry figures want Frasers to settle what Harvey Nichols owed suppliers before its administration. That quote is Murray's answer. So the small designers who shipped to a failing store should've known better. Technically fair. Also the last thing they want to hear from the guy now selling their clothes. The news in it: Murray says Frasers bought the Harvey Nichols buildings in Edinburgh and Manchester, which it hadn't announced, and will refurbish Manchester next year. It's in talks with the Cadogan estate over Knightsbridge, and Bristol and Leeds become Flannels. He says Harvey Nichols was losing 40 to 50 million pounds a year. And Boss? Frasers owns 47.89 percent and Murray chairs the board, so he's careful about the two hats. Frasers also holds 37 percent of Mulberry and a 4.16 percent economic interest in Burberry. Company-reported: fiscal 2026 revenue up 8.7 percent to 5.3 billion pounds, adjusted pre-tax profit down 4 percent, and no guidance for fiscal 2027. Owning the buildings is smart. But luxury runs on brands trusting you. That party only works if the designers in the room believe they'll get paid. His forecast is a lot of consolidation over the next three to five years. After the week department stores just had, he won't run short of targets.
Jean E. Palmieri, writing in WWD:
Yedid said the eight-year deal for the use of The Limited name was set to expire at the end of 2026 and it would have cost Belk’s new owners $10 million a year to retain the private brand, so they declined.
So CP Brands, which owns Thomas Pink and owns or licenses Wrangler and Vince, bought The Limited from Sycamore Partners last month, alongside One Step Up's Harry Adjmi. Terms weren't disclosed. The chain closed every store and went bankrupt in 2017, and since then the name has been a Belk private label. Mall nostalgia as an asset class. I get it. But CEO Eli Yedid says himself it'll be in the wardrobe for one to two years. That's not a brand, that's a hanger. The plan is licensing, not stores. Yedid is meeting potential U.S. licensees to anchor the women's collection and wants specialty and department store distribution, the website back, and partners in Asia and Europe. At Belk, 30 to 70 dollars was the sweet spot. He wants a Vince-like look at a moderate price, and a New York pop-up before any store. My test is who designs it. If a licensee just stitches the label into generic blazers, women in their fifties will notice in about four seconds. The telling number is that 10 million a year. Belk's new owners wouldn't pay it to keep the name. CP Brands is betting a spread of licenses can earn more.
Harrison Christian, writing in news.com.au:
The receivers said that notwithstanding an increase in sales and other improvements across the group, these were insufficient to mitigate the impact of overhead costs currently in the business.
Cue Clothing and sister label Veronika Maine went into administration last month. Founded in 1968, Cue once had more than 230 stores and concessions across Australia and New Zealand. It's down to 51, and receivers FTI Consulting plan to shut at least five. A sale process for the business as a going concern is coming. Hilco Capital bought it from the Levis family in April last year. Before that, a succession fight. The founder's son, Justin Levis, sued his parents seeking a constructive trust over up to half the company, and that case is ongoing. Meanwhile the product stood still. Macquarie's Jana Bowden put it bluntly: fashion changed, and Cue didn't get the memo. Same region, opposite result. Per b2bnews, Hallenstein Glasson's year to August 1 had sales up 19.6 percent, pre-tax profit up 43.8, and gross margin up to 61.7 percent from 59.3. Company-reported, and about four points of that sales growth was currency. Glassons Australia grew 29 percent, there's no interest-bearing bank debt, and the first eight weeks of the new year are up 18.4 percent in constant currency. Rising margins means people are paying full price. That's the brand-heat number that matters. And inventory fell while sales climbed. Cue's sales were rising too. It just couldn't carry the overheads.
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We'll be watching for LVMH's third-quarter revenue on October 12, Frasers' plans for Harvey Nichols in Knightsbridge, and whether anyone bids for Cue as a going concern. Links to every story are in the show notes. That's Fashion Business Daily for today. We'll be back tomorrow. This is a Lantern Podcast.