Luxury brand Hermes plans to shift the burden of tariffs in the United States to its wealthy clients, increasing prices by up to 12% starting May 1. The company’s first-quarter sales fell short of expectations, with a 7% rise on a constant currency basis, below analyst forecasts.
Hermes’ Finance Chief Eric du Halgouet said higher US prices will “fully offset” tariffs, citing pricing power as the brand’s key to recovering from the impact of trade tensions. The company has maintained production levels at 6-7% annually to maintain its exclusive image and avoid slumping sales.
Despite a lack of significant changes in shopper behavior in the US, du Halgouet expressed caution due to ongoing geopolitical uncertainty. In contrast, Hermes’ European sales grew 13.3%, driven by traveling Americans benefiting from a strong dollar.
The company’s decision follows LVMH’s announcement of a 5% sales drop in its fashion and leather division, allowing Hermes to take its place as the world’s most valuable luxury group by market cap. The US tariffs could include a 20% charge on European fashion and leather goods and 31% for Swiss-produced watches if fully applied.
In China, where production was limited due to a real estate crisis, du Halgouet noted no major signs of improvement, but government efforts to boost spending were a positive signal. The luxury industry is bracing for its longest slump in years, with wealthy Americans expected to drive growth.
Source: https://www.reuters.com/business/retail-consumer/hermes-sales-up-7-first-quarter-slightly-missing-expectations-2025-04-17