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Hermes to Raise Prices after Q4 Sales Boom

(FILES) This picture taken on December 20, 2017 shows the logo of the French fashion main house and luxury goods Hermes outside a shop in the fashionable and luxurious street "rue du faubourg Saint-Honore" in Paris. (Photo by STEPHANE DE SAKUTIN / AFP)
(FILES) This picture taken on December 20, 2017 shows the logo of the French fashion main house and luxury goods Hermes outside a shop in the fashionable and luxurious street "rue du faubourg Saint-Honore" in Paris. (Photo by STEPHANE DE SAKUTIN / AFP)
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Hermes to Raise Prices after Q4 Sales Boom

(FILES) This picture taken on December 20, 2017 shows the logo of the French fashion main house and luxury goods Hermes outside a shop in the fashionable and luxurious street "rue du faubourg Saint-Honore" in Paris. (Photo by STEPHANE DE SAKUTIN / AFP)
(FILES) This picture taken on December 20, 2017 shows the logo of the French fashion main house and luxury goods Hermes outside a shop in the fashionable and luxurious street "rue du faubourg Saint-Honore" in Paris. (Photo by STEPHANE DE SAKUTIN / AFP)

Birkin bag maker Hermes said it will raise prices this year after sales jumped 17.5% in the fourth quarter of 2023, demonstrating the resilience of high end shoppers despite economic headwinds.
Sales for the three months to the end of September totaled 3.36 billion euros ($3.62 billion), up 17.5% at constant foreign exchange rates. That was ahead of expectations for 14% growth, according to Visible Alpha consensus estimates.
The company plans to lift prices by between 8% and 9% this year globally, executive chairman Axel Dumas told reporters on Friday, according to Reuters.
One of the most consistent performers in the luxury goods industry, Hermes has a track record of outpacing rivals when economic conditions deteriorate, thanks to its classic designs and careful management of production and stocks, which helps maintain the label's aura of exclusivity.
Handbags like the coveted $10,000 plus Birkin model are affordable only for the wealthiest shoppers -- who are typically the more immune to choppy economic conditions.
Hermes will pay a 4,000 euro bonus to each of its over 22,000 employees worldwide, the company said.

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Fashion

Kering Posts 11% Drop in Q2 Sales, Sees Weak Second Half

The logo of luxury brand Gucci is seen in Tokyo on June 22, 2021. (AFP)
The logo of luxury brand Gucci is seen in Tokyo on June 22, 2021. (AFP)
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Kering Posts 11% Drop in Q2 Sales, Sees Weak Second Half

The logo of luxury brand Gucci is seen in Tokyo on June 22, 2021. (AFP)
The logo of luxury brand Gucci is seen in Tokyo on June 22, 2021. (AFP)

Kering reported a bigger-than-expected drop in second-quarter sales and forecast a weak second half, as the French luxury group struggles to revive its key label Gucci and worries grow about a prolonged downturn in high-end spending.

Sales at the French luxury group which owns labels Gucci, Boucheron and Balenciaga, fell to 4.5 billion euros ($4.9 billion), an 11% drop on an organic basis, which strips out currency effects and acquisitions.

The figure was below analyst expectations for a 9% drop, according to a Visible Alpha consensus.

It also said second-half operating income could fall by around 30%, following a 42% drop in the first half.

Sales at Gucci fell 19%, showing no improvement from the first quarter, and below analyst expectations for a 16% decline, according to a Visible Alpha consensus.

Kering has been revamping Gucci, the century-old Italian fashion house which accounts for half of group sales and two-thirds of profit.

Minimalist designs from new creative director Sabato de Sarno, which began trickling into stores earlier this year, are key to the design reset and push upmarket, in a bid to cater to wealthier clients who are more immune to economic headwinds.

Kering chief financial officer Armelle Poulou told reporters that the designs had been well received and the rollout was on track.

But the efforts have been complicated by a downturn in the global luxury market, while China's rebound - traditionally Gucci's most coveted market - was clouded by a property crisis and high youth unemployment as Western markets came down from a post-pandemic splurge.

Earnings from sector bellwether LVMH on Tuesday missed expectations as sales rose 1%, offering few signs that a pickup is around the corner, sending shares in luxury goods companies down on Wednesday. Kering traded at its lowest level since 2017.