Dive Brief:
- Hermès is preparing to raise prices in the U.S. to offset the impact of proposed tariffs on imports from the European Union, according to an earnings call Thursday.
- The France-based luxury house will increase the prices beginning May 1, which Eric du Halgouët, executive vice president of finance, said will compensate for the gross effects of an extra 10% tariff rate applicable to the EU.
- Hermès doesn’t plan to increase prices in any other region, du Halgouët said.
Dive Insight:
Hermès first noted that it would raise prices in the face of tariffs during its last earnings call in February. At the time, Executive Chairman Axel Dumas said he expected American customers to remain loyal despite increased prices.
Hermès produces about 75% of its products in France, but it sells all over the world.
Price increases will be applied across business lines, du Halgouët said Thursday. The exact price changes set for next month are still being calculated, because the exact tariff levels haven’t been set in stone.
“We remain cautious because we know that these announcements have a huge impact on the financial markets and [an] impact also on the dollar,” du Halgouët said.
Also Thursday, Hermès reported first quarter revenue of 4.1 billion euros, or about $4.66 billion, a 9% increase year over year.
The company similarly reported increases across business lines, with the exception of the watches division, which fell 10% year over year.
Leather goods and saddlery grew 10%, while the ready-to-wear and accessories division grew 7%. Silk and textiles grew 5%, and perfume and beauty was flat.
Though Hermès has consistently seen revenue growth while some of its luxury peers experienced declines, the Q1 results show a slight slowdown compared to Q4 of 2024.
In the release, Dumas said Hermès showed strong Q1 growth due to “the trust of its customers.”
“In a complex geopolitical and economic context, the house is strengthening its fundamentals more than ever: uncompromising quality, creativity at the heart of all development, and vertical integration, a guarantee of preserving unique savoir-faire,” Dumas said.
Consumer loyalty is a key part of Hermès’ strategy, and during the call, du Halgouët said this factor was especially crucial “in these uncertain times.”
