Hermès raises prices in the US to avoid duties

Hermès increased product prices on its US website. Bernstein analysts' estimates indicate a weighted average price increase of between 4 and 5 per cent, as a decision already announced by management at the time of the quarterly figures that import duties in the US would be passed on to consumers.

"On a revenue-weighted basis, almost all SKUs ("stock keeping units" and refers to a unique code assigned to a product to identify it in an inventory, ed.) in Hermès' core categories - Ready-to-Wear, Leather Goods, Silk & Fabrics and Jewellery - which, according to our estimates, account for more than 90% of revenues, have experienced price rises of between 4% and 5%," reads the report released by Bernstein, which continues: "Our estimates, however, exclude models not present online (e.g. Birkin, Kelly and Constance), on which we nevertheless expect increases in line with those observed for web items."

Analysing a sample of more than 3,300 products on the American site (hermes.com/us) in the categories Women's Bags, Women's Jewellery, Women's Ready-to-Wear, Women's Silks & Accessories, Bijou Jewellery, Watches, Fragrances, Makeup and Home, Bernestein's analysts estimate that two thirds of the items have experienced price increases. The only segments with substantially unchanged prices are those of the Home, Fragrances and Makeup divisions: "the latter, with an average selling price of $169 and $186 respectively against a sample average of $3,468, represent the most 'accessible' and price-sensitive categories," explains the report. Hermès has therefore decided to absorb the duties on Perfumes & Beauty, still produced in France and Italy, to safeguard its positioning balance. The decision probably also stems from the fact that these divisions contributed only 3.5% to full-year sales in 2024, analysts point out.

"The pricing power of Hermès clearly emerges: the reported list price increases are about 100-200 basis points higher than those recently applied by Louis Vuitton (amounting to 3-4% on women's accessories in the US). These increases are calibrated to cover a possible 20% duty scenario and compensate for the weakening of the dollar against the euro,' highlights the report, which continues: "While we do not consider Hermès to be entirely immune to a potential weakening in demand - as evidenced by the decision to absorb duties in Perfumes & Beauty -, we expect organic growth for the 2025 financial year supported by +5-6% in volumes and price rises in excess of 5-6%, particularly in Leather Goods, where the brand holds undisputed pricing power." Hermès thus remains the "Best Idea" according to Bernstein for the second quarter of 2025: "we confirm our Outperform rating and target price at €2,600", against yesterday's close at €2,440 in Paris (-1%).

Several luxury groups are moving in this same direction, starting with Lvmh. Louis Vuitton has increased the prices of its handbags in the US by an average of 3.6%, Bernstein had pointed out last week, pointing out, however, that many items have not changed, which might suggest that they are produced locally. In fact, the French brand has three ateliers on US soil. On the Prada front, CEO Andrea Guerra stated last week: 'We have talked in the past about our strategy of maintaining prices, between 2 and 4 points every six months. We have not yet decided what to do in June and July. By then we will also have to understand what will happen with the duties and we will certainly have to do something with pricing, but today I do not know the exact amount yet'.