Shoppers of luxury goods will see their deep pockets stretched further after Hermès said it will shift the burden of tariffs onto customers.
The French brand is set to deploy its pricing power as one of the most resilient luxury companies to endure the slowdown in the sector and the continuing uncertainty surrounding trade.
“We are going to fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines,” Eric du Halgouët, the chief financial officer of Hermès, said.
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Hermès expects its wealthy customer base and high demand for its exclusive bags to help it resist a downturn amid concerns of a slowdown in the wider luxury sector. The French luxury brand is known for its Birkin and Kelly handbags which sell for over $10,000, as well as its $800 Oran sandals and the Chaine d’ancre Divine bracelet which has a price tag of $11,500.
The group said it will add a premium to all its goods sold in the US, on top of its planned price adjustments which were between 6 and 7 per cent this year.
“As we look into a highly uncertain future we expect the group to benefit from far superior pricing power versus peers,” James Grzinic, an analyst at Jefferies, said.
Trump’s tariffs have added further uncertainty to the luxury sector with many analysts cutting their forecasts for the industry as the trade levies look set to weigh on revenues.
Heidi Klum, the model, pictured with a Hermès handbag in New York earlier this month
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Hermès reported sales of €4.1 billion for the three months to the end of March, up 7 per cent from the same period last year but below markets forecasts of a 9.8 per cent increase.
Du Halgouët said the group had yet to record a change in customer spending in the US. Hermès reported 11 per cent sales growth in the Americas during its first quarter compared with the same period a year earlier.
“Of course, we are cautious about the United States, given the discussions, the geopolitical uncertainty which, as you know, have caused a great deal of volatility on the financial markets,” du Halgouët said.
Hermès follows LVMH this week in reporting weaker than expected sales as the luxury sector braces for a slowdown amid continued sluggish sales in Asia on top of uncertainty in the US regarding tariffs.
Shares in Hermès fell €76, or 3.22 per cent, to €2,287 in Paris.
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