PARIS — As the business world adjusts to the Trump administration’s tariffs, Hermès International has followed through with the price increases promised during its most recent round of financial results.
Bernstein analysts examined prices on the brand’s U.S. website across women’s bags, jewelry, ready-to-wear, silks and accessories, watches, fragrances, makeup and home, concluding that prices have been bumped up an average of 4 to 5 percent across the board.
“These will likely cover for a worst-case scenario of 10 percent tariffs and compensate for the recent weakening of the U.S. dollar against the euro,” Bernstein analyst Luca Solca wrote in a report this week.
Hermès’ move follows Louis Vuitton raising its prices in the U.S. 3 to 4 percent in April.
Hermès can lean on its “undisputed” pricing power, according to Bernstein. The company has steadily increased prices each year, but it still hasn’t dented customers’ desire: Sales were up 17 percent for the fourth quarter of 2024 and continued to rise in the first quarter, up 10 percent year-over-year.
In fact, the company is trying to increase production capacity for its popular handbags by building four new factories over the next four years after it was hit by tight supply over the holiday period and start of the year in the U.S., despite price increases of about 6 to 7 percent last year.
Hermès chief executive officer Axel Dumas believes the company’s reputation makes it a steady choice for customers in turbulent times. Speaking at the company’s annual shareholders’ meeting on April 30, he recalled the 2008 financial crisis as raising the brand’s value. “There was a flight to quality,” he said. “Hermès is the gold standard in a way.”
Hermès is still “top-of-the-mind for consumers…particularly in China,” the Bernstein report noted.
“I think it pays for a brand like Hermès to sit at the very top of consumer desirability. When consumers are more guarded, when they have second thoughts about spending money, when they cut their budgets — think of the Chinese, for example — Hermès is the very last brand they give up on,” Solca told WWD.
“Almost all” pieces in the core categories of fashion and accessories have increased in price though handbags — including the Birkin, Kelly and Constance ranges — are not sold online. However, “we expect price increases for these products to fall within a similar range,” Solca said in the report.
The categories that were less or not affected were mostly in the home, fragrances and makeup categories.
“We do not expect Hermès to be completely immune to weakening demand — as its decision to absorb tariffs in perfume and beauty shows,” he said.
Solca noted that these categories are the entry-level points for aspirational customers. “The fragrances and makeup categories represent Hermès’ most accessible and hence most price sensitive categories,” he said. Prices in these categories average in the high hundred, about $169 to $186. “Hermès has likely taken the decision to absorb tariffs on these products — they are still manufactured in France and Italy and are still subject to tariffs — in order to defend is pricing balance.”
Those categories are a smaller chunk of the Hermès business, only about 3.5 percent of its gross sales. In the first quarter, sales in the perfume and beauty category were down half a point to 129 million euros, while sales in the home and jewelry category were up 6.1 percent to 256 million euros.
On average, Hermès increased prices 5 percent in handbags, jewelry and women’s silks — which includes its famous scarves. Women’s ready-to-wear — a category that jumped 7.2 percent at constant currency in the last quarter, racking up 1.15 billion euros in sales — saw its prices increase by 4.2 percent.
Watches saw smaller price hikes of 3.4 percent, with the average timepiece ringing up at $10,581. The category has been struggling, with sales down 10 percent in the first quarter.