"A Level to Offset the 10% General Tariff"
The Herm?s Birkin bag was exhibited after being submitted to the Swiss Sotheby's auction in November last year. Photo by Reuters and Yonhap News.
French luxury company Herm?s, famous for its 'Birkin bag,' plans to raise product prices in the United States starting next month. It is observed that the company is passing on the tariff burden to consumers.
According to the U.S. economic media CNBC, Eric du Halgou?t, Herm?s' Vice President of Finance, stated during a call with analysts after the first-quarter earnings announcement on the 17th (local time) that the company plans to increase prices to offset the impact of U.S. President Donald Trump's tariffs on corporate growth.
He added that the price increase is due to tariffs and will only apply to the U.S. market. The price hike is scheduled to take effect from the 1st of next month, and the company aims to fully offset the effects of the 10% general tariff imposed by the U.S. earlier this month.
President Trump announced a 20% reciprocal tariff on the European Union (EU) on the 2nd of this month but later postponed the country-specific reciprocal tariffs for 90 days, applying only the basic 10% tariff. If President Trump's tariff policy is applied as originally planned, European Union (EU)-made fashion and leather products, which are key products in the luxury industry, will be subject to a 20% tariff.
Herm?s stated that it has not been affected by the tariff imposition so far, but in reality, its performance in the U.S. market has been poor. Vice President du Halgou?t said regarding Trump's tariffs, "We have not yet seen any impact, but we are still maintaining a very conservative stance."
Industry experts evaluate that Herm?s is in a more advantageous position than other companies in navigating the tariff war because it has pricing power. Especially in the Chinese market, while other luxury brands struggled due to decreased demand, Herm?s showed resilience in performance. This is interpreted as being due to sustained consumption by high-income groups.
Herm?s' first-quarter sales were 4.13 billion euros (approximately 6.67 trillion won), a 7.2% increase considering exchange rate fluctuations. This slightly missed analysts' expectations of 4.14 billion euros. The growth rate also slowed compared to the previous quarter's 18% increase.
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