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Louis Vuitton is increasing its prices globally on Wednesday as production costs surge, according to a Reuters report.
Prices will increase across the French luxury brand’s leather goods, fashion accessories and perfumes, a spokesperson for Louis Vuitton in China told Reuters. The spokesperson did not disclose how much the prices would increase, but noted that it would vary depending on the product. Louis Vuitton did not immediately respond to requests for comment by Vogue Business.
The LVMH-owned powerhouse is one of the first luxury giants to adjust its prices this year in response to inflated raw material, manufacturing and transportation costs caused by global supply chain issues, Reuters reported today.
Costs are rising all the way along the supply chain. American luxury fashion businesses discuss the impact on the pricing of collections.
Supply disruptions caused by the pandemic led to significant global inflation across the globe in 2021. The US consumer price index for December rose by 7 per cent, the highest figure since 1982; inflation in the UK reached a 30 year record high also in December; while consumer inflation reached a record 5.1% in the Eurozone in January 2022. Luxury’s biggest brands have outperformed the wider luxury market during the pandemic, allowing for price gains, seen at rivals like Chanel, whom Morgan Stanley estimates has raised bag prices by close to 20% cumulatively since the start of the pandemic.
“You can bet on further price increases, because top of mind luxury brands have the ability to protect their margins, also in an inflationary environment,” says Mario Ortelli, managing director of Ortelli Co. Moreover, price increases are linked to the brand elevation strategy of some companies. “Pricing is a science and brands perform price decisions, in order to keep a coherent price architecture among and within product categories and across geographies.”
LVMH’s fashion and leather goods sales jumped 47 per cent to a record €64.2 billion in 2021 despite ongoing disruptions, driven by momentum in the US and China, the company said in January. LVMH does not publish individual brand earnings but Bernard Arnault credited Louis Vuitton for the division’s performance. According to HSBC estimates, Louis Vuitton was expected to generate €16.7 billion in 2021.
Arnault was confident about the company’s ability to react to inflation, and hinted at the price increases. “Everyone is talking about inflation [...] I don’t expect such an economic crisis. We have just gone through two very challenging years. I’d rather think that things will continue to improve, but we have an advantage on quite a few other groups which is that we have a degree of flexibility on our prices. So in the face of inflation, we have the ways and means to react. And, I believe that demand will remain strong for our products,” he said in the annual earnings press conference.
Tag Heuer, another LVMH-owned brand, said on 11 February that it plans to raise its prices in April, according to a Bloomberg report.
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