Tassilo Hummel and Mimosa Spencer
PARIS (Reuters) – European luxury manufacturers say they can use their pricing power to offset the costs of tariffs imposed by US President Donald Trump, but analysts say some brands have pricing They say there may be limited room for lifting the
Famous brands like LVMH’s Louis Vuitton and Kering’s Gucci have relied on the buoyant US market as China is behind this year.
But Trump threatened new tariffs on the European Union due to surplus of trade with the US in an escalation of attacks that economists say could cause a global economic slowdown.
Executives at Hermes and Kering said last week that they can use branded cash to absorb additional obligations, as they manufacture handbags and loafers for sale for thousands of dollars.
“If the duties rise, we will raise prices accordingly,” Hermes executive executive chairman Axel Dumas said Friday after reporting the results.
Kering CEO Francois-Henri Pinault signaled the same commitment earlier this week, saying his brands, including Gucci, Balenciaga and Yves Saint Laurent, would “review pricing strategies” in the case of tariffs.
“We know how to operate it,” he said.
Passing costs
However, years of aggressive price increases, especially during the post-pandemic boom, can make it difficult for some brands to take over higher import costs.
Most brands have raised the most prices ever in recent years, said analysts at companies, including UBS, Citi and Bernstein.
According to UBS, Chanel’s classic quilted flap bags have been priced more than triple since 2010, with the Lady Dior Bag and Louis Vuitton Keepall Travel Bag more than doubled.
“We’ve talked a lot about ‘greed’ over the past 12 months. said HSBC analyst Arwan Ramburg.
Careful pricing
A significant price increase will counteract recent trends in more cautious pricing policies, particularly in the US market.
For example, Dior kept US prices flat last year, while Louis Vuitton increased them by more than 2%, according to data and data from a Paris-based market intelligence company that monitors online retail prices for brand catalogs.
Chanel increased prices by 5.4% in a medium move compared to previous years, but jewellers Tiffany and Richmont owned Cartier and Van Cleef & Arpels rose to over 8% year-on-year to 4 It increased from % to 6%. Data is shown.
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