.jpg)
US shoppers, brace yourself.
Earlier this year, Hermès increased prices between 6 and 7 per cent globally. Now, the French luxury house will increase prices uniformly across its different categories — including leather goods, ready-to-wear, beauty and watches — in the US on 1 May to offset the impact of the new 10 per cent import tariffs. (The company has not yet defined the increase.)
It was announced during the company’s first quarter conference call on Thursday. “At this stage, the rules have not yet been finalised. As you know, however, since 9 April, we have been paying additional tariffs of 10 per cent, which are the rates applicable within the European Union, and we will be fully compensating for the gross impact of these new customs duties,” Eric du Halgouët, Hermès vice president of finance, told analysts.
Hermès reported that revenue reached €4.13 billion in the first quarter, up 7 per cent year-on-year at constant exchange rates — a touch below expectations of 8 per cent. This marks a deceleration compared with the fourth quarter, when sales were up 18 per cent. The Hermès stock was down 3 per cent on Thursday morning trading. After surpassing LVMH in terms of market capitalisation on Tuesday, Hermès and LVMH’s market caps remain neck and neck (in the ballpark of €245 billion).
Still, Hermès continues to outperform the industry. The luxury industry is in recovery mode after last year’s slowdown, but economic instability worldwide has impacted projections. LVMH missed expectations in Q1, with organic sales down 3 per cent on Monday, including a 5 per cent drop at its fashion and leather goods division, which sent the LVMH stock down 8 per cent on Tuesday. The Moncler brand posted sales up 2 per cent, above the 0.5 per cent consensus expectations. Brunello Cucinelli reported sales up 10.5 per cent at constant exchange rates. Kering will publish on 23 April, Prada on 30 April, Burberry on 14 May and Richemont on 16 May. HSBC expectations are -13.6 per cent for Kering, 11.3 per cent for Prada, -7.3 for Burberry and 6.8 per cent for Richemont.
Hermès said sales in Asia (excluding Japan) were up 1.2 per cent, while Japan was up 17.2 per cent. Sales in the Americas were up 11 per cent. In the US, the company cited extreme weather at the beginning of the quarter, which — alongside the Los Angeles fires, which led Hermès to close two Beverly Hills stores for several days — has seen the southern states battered by a rare snowstorm. Inventory levels were also low after a strong fourth quarter (when sales were up 22 per cent year-on-year). However, Hermès didn’t appear to see an impact from the context of uncertainty preceding US President Donald Trump’s “Liberation Day” tariffs announcement on 2 April. March in the US was “very good” with no change in trend in April so far, according to Du Halgouët. Revenue from Europe was up 13.3 per cent.
“The mix in geographic progression resembles that of the LVMH fashion and leather goods division, yet at a 10-15 percentage points higher altitude. In both cases, the tough comparison basis in China weighs heavily — they should get better as we progress in the year,” wrote Bernstein luxury goods analyst Luca Solca. (By comparison, Hermès sales in Asia excluding Japan were up 14 per cent in Q1 2024.)
Citi managing director Thomas Chauvet called the brand’s sales performance “resilient”, pointing to double-digit growth in the high-margin leather goods category (up 10 per cent). Revenue from ready-to-wear and accessories was up 7.2 per cent; silk and textiles up 4.5 per cent; other sectors, including jewellery and home, up 6.1 per cent; perfume and beauty down 0.5 per cent; and watches down 16.5 per cent.
Hermès executive chairman Axel Dumas said in a statement: “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. Despite a high comparison basis in the first quarter, the group achieved solid growth in sales, thanks to the trust of its customers and the commitment of the teams, whom I thank warmly.”
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
More from this author:
Luxury’s first-quarter cheat sheet
Who is Miguel Castro Freitas, Mugler’s new creative director?
Loewe’s new creative directors Jack McCollough and Lazaro Hernandez discuss their appointment
