Even if Hermes bags "reek like a skunk" unfortunately, there are always people who covet such an expensive designer item, whatever its flaws because they believe that ownership of it boosts their status. Regardless of whether it smells or not, the desire to have these items will not be diminished because such people are only interested in the status symbol of the object and not in it's individual attributes or practicality of the product.
I am not aware of the particulars of this story but given that Hermes is a long standing name in fashion I hardly doubt one problem is going to decimate the brand. Hermes is a company that takes care of their customer. It is likely they will correct any problem a customer has.
As long as the company makes good on their customer's demands for replacement bags, Hermes could come out smelling like a rose. Showing impeccable customer service to their elite clients will allow them to keep those customers and possibly even bring them more fans in the future. Some clients may chose to keep those smelly bags as a status symbol, even as others are rushing to return them.
In the history of consumer goods catastrophes on the part of corporate America, the recent scandal over Hermes bags ranks pretty high in terms of the level of disaster involve. Anyone who can afford to drop $20,000 on a single hand bag is clearly a very high level consumer, someone with disposable income matched by few others, and when one of these consumers makes such a substantial investment, they expect the product and their buying experience to be flawless. Clearly Hermes has not delivered that high level experience, and the fallout will likely be detrimental to the integrity of its brand.