Investing.com -- French luxury goods manufacturer Hermes, known for its iconic Birkin bags, is planning to increase prices in the U.S. as a measure to counteract the potential impact of tariffs. This move comes as the luxury sector prepares for a global trade war amid a backdrop of decreasing demand.
Hermes stated that the tariffs implemented by President Trump have not affected the company yet. However, it did note a sluggish start to the year in the U.S., with no sales growth in China. Despite these challenges, the company’s first-quarter sales experienced a 7.2% increase, adjusted for currency movements. This represents a slowdown from the 18% growth Hermes saw in the previous quarter.
The company’s executive vice-president of finance, Eric du Halgouet, shared on Thursday during a call with analysts that the price hikes are being calculated to balance out the potential impact that tariffs could have on growth. These increases will only apply to the U.S. market, as they are specifically designed to counteract American tariffs.
This move from Hermes is indicative of how businesses, even those catering to the wealthiest consumers, are adapting to an era of escalating trade tensions. President Trump’s broad tariff plans have pushed businesses across various sectors to prepare for potential instability.
Some are attempting to transfer the additional costs to consumers, while others are exploring ways to reduce costs to absorb the impact. Certain companies have also withdrawn their guidance due to the prevailing uncertainty.
Du Halgouet stated that while Hermes hasn’t seen any impact from the tariffs yet, the company remains very conservative in its approach.
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