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Hermès’ Expensive Bags Are About to Get Even More Expensive

BBG News

Following the announcement of Q1 2025 sales falling short of analyst projections on Thursday, Hermès unveiled intentions to boost the prices of all its U.S.-bound goods as a response to the burden caused by President Donald Trump’s recently implemented tariffs.

According to Finance Chief Eric du Halgouet, as reported by BoF, we are planning to compensate for these new tariffs by boosting our prices in the U.S. starting May 1st, across all our product lines. This French brand had earlier alerted consumers about possible price increases due to tariffs. In fact, they’ve already bumped up their prices by approximately 6% this year as part of their usual annual price adjustment, which helps preserve the exclusivity of their leather products.

For the quarter ending March 2025, Hermès announced a sales growth of 7.2%, totaling approximately €4.1 billion EUR or $4.66 billion USD. However, analysts anticipated the luxury brand, having recently surpassed LVMH to claim the title of most valuable luxury company this week, to report a 9.8% increase in sales during that period.

During the initial quarter, du Halgouet mentioned that consumer habits remained consistent in the U.S., despite a significant surge of over 10% in sales reported by the company. The business didn’t share its plans to hike prices in the region; however, it can be expected that shoppers who are fond of Birkin products will continue to fuel demand for the brand.

Over the past week, Trump announced a 10% tax on imports globally, following a 90-day deferment of increased tariffs. Should these measures be implemented comprehensively, American tariffs may escalate to impose 20% taxes on European fashion and leather items.

The recent news arrives as the extravagance industry encounters a decrease in spending, which is partially due to post-pandemic expenditure exhaustion, further aggravated by escalating inflation rates and a slowing economy, mounting debt crisis, and property market downturn in China – a key market for high-end brands. So far, Hermès has managed to withstand the impact of this spending decline, albeit facing difficulties in boosting demand in China.

See Hermès’ full Q1 2025 financial report here.

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2025-04-18 21:55

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