Hermès has announced plans to raise prices on its handbags and scarves in the U.S. starting May 1, citing tariffs imposed by the Trump administration on Chinese goods.
Price Increase and Its Reasons
Hermès finance chief Eric du Halgouët confirmed the price hike during an analyst call, noting that it only affects American shoppers. There will be no price changes in Europe or Asia. The tariffs triggering this increase are the 10% universal duties imposed in early April.
Hermès Financial Performance
Sales for Hermès in the Americas grew 11% in the first quarter, bringing in about 17% of the company’s total revenue from January to March. However, the full global growth came in at only 7%, falling short of the expected 8-9%. Deutsche Bank termed the results 'robust,' although weak spots were noted in watches and perfume.
Market and Competition
Hermès now rivals LVMH in market capitalization, but the revenue gap remains significant. Both brands are facing challenges: LVMH reported a surprising drop in sales for Q1. Analysts believe that luxury firms can endure price increases better than regular retailers, but an economic downturn may impact affluent customers as well.
Hermès' price increase reflects the impact of trade tariffs on the luxury market and highlights the current challenges faced by major players in the industry.
