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Hermès will shift the burden of Donald Trump’s tariffs on to shoppers in the form of higher US prices for its luxury goods, the French group said on Thursday, as it bets on the resilience of its wealthy consumers.
Chief financial officer Eric du Halgouët said the maker of coveted Birkin and Kelly bags “had compensated the gross effect” of a new 10 per cent levy on European imports by raising prices from May 1 in the US, as it reported quarterly results.
He added that Hermès would continue to do so “across the divisions of the business” in order to cope with changes in US trade policy, though he said the group was still calculating the exact level that prices would have to rise.
His comments come as the luxury industry braces for the fallout of Trump’s trade war on the market for high-end goods, with tariffs shattering hopes of a US-driven recovery this year.
Hermès is expected to use its position as one of the luxury industry’s most resilient names to withstand trade turmoil, betting on its ultra-wealthy client base and high demand for its bags that outstrips supply.
“As we look into a highly uncertain future . . . we expect the group to benefit from far superior pricing power versus peers,” said James Grzinic, analyst at Jefferies.
Trump’s so-called reciprocal tariffs on US trading partners announced this month have led several analysts to slash their expectations for a luxury sector upturn in the second half of the year.
Softer growth in China weighed on overall sales at Hermès in the first quarter, leaving revenue growth slightly below expectations after a strong 2024 that outpaced the rest of the industry.
The Paris-listed group, which now vies with LVMH to be the luxury sector’s biggest company by market value, recorded 7 per cent year-on-year organic revenue growth in the first quarter for a total of €4.1bn, less than the 8.8 per cent growth analysts had expected.
The result was a slowdown on the 18 per cent growth the group reported in the previous quarter, as the downturn in China hit sales. Hermès withstood that slowdown better than rivals last year.
Sales in Asia outside Japan grew 1 per cent “despite a particularly high comparison basis” and a downturn in Chinese demand over the past year, the company said. Shares fell 3 per cent in morning trading on Thursday.
The luxury industry has struggled following a boom in the Covid-19 pandemic as middle-class consumers have reined in spending and China’s economy has faltered, factors that are now being compounded by Trump’s aggressive trade war.
“The tough comps in China weigh heavily — they should get better as we progress in the year [while] the category mix confirms a slower consumer demand environment,” wrote Luca Solca, analyst at Bernstein.
Sales at Hermès progressed in every region, with the Americas up 11 per cent, with “continued solid momentum” in March. Europe, France and Japan were all up by double digits in the quarter.
The group’s core leather goods division grew 10 per cent. Fashion, jewellery and sales of the group’s signature silk scarves all also grew compared with the year before.
However perfume and beauty, a segment that is more exposed to aspirational shoppers due to its lower price point, was flat, while watches fell 10 per cent.
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