According to U.S. economic media CNBC on the 17th, Hermes’ vice president of finance Eric Du Algue said in a phone call with analysts after the first-quarter earnings announcement that he plans to raise prices to offset the impact of U.S. President Donald Trump’s tariffs on corporate growth.
He said the price hike would only apply to the U.S. market as it was due to tariffs.
Prices will increase from the 1st of next month, and the company explains that it aims to completely offset the aftermath of the 10% universal tariff imposed by the U.S. earlier this month.
President Trump announced a 20% mutual tariff on the European Union (EU) on the 2nd, but since then, he has decided to apply only 10% of basic tariffs while suspending each country’s mutual tariffs for 90 days.
Hermes said the tariffs have so far been unaffected. However, U.S. market performance has remained low and sales in China have not increased.
Hermes’ first-quarter revenue was 4.13 billion euros, up 7.2% given currency fluctuations. It was slightly below analysts’ expectations of 4.14 billion euros. Compared to the 18% increase in the previous quarter, the increase was smaller.
The Wall Street Journal (WSJ) analyzed that Hermes’ price increase plan shows that companies targeting the wealthy are also preparing for an era of global trade tensions.
Vice President Du Algue said, “We are still very conservative, although we are not seeing any impact yet” on the Trump tariffs.
Industry sources say Hermes has pricing power and is in an advantageous position over other companies in navigating the tariff war.
In particular, Hermes showed resilience in its performance when other luxury brands struggled with falling demand in the Chinese market. This is because high-income people’s consumption has been maintained.
French luxury goods company Louis Vuitton Moët Hennessy also reported weaker-than-expected quarterly sales early this week, sending its stock price plummeting. It once lost its No. 1 position in French market capitalization to Hermes.
JENNIFER KIM
US ASIA JOURNAL
