Hermes sales up 7% in first quarter, slightly missing expectations
PARIS, April 17 (Reuters) - France's Hermes will carry out price hikes in the United States to fully offset the costs from President Donald Trump's tariff policies, the company said, as it posted first-quarter sales below market expectations in a rare show of weakness.
Banking on its pricing power, Hermes intends to add a premium to all of its products sold in the country from May, coming on top of regular price adjustments which were around 6-7% this year.
"We are going to fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines," said Finance Chief Eric du Halgouet, adding the company was still finalising the exact rates.
The company known for its Kelly and Birkin handbags, which fetch upwards of $10,000, reported sales for the three months ending in March of 4.1 billion euros ($4.66 billion), a 7% rise on a constant currency basis.
The performance fell below analyst expectations for 9.8% year-on-year growth, according to a VisibleAlpha consensus estimate cited by HSBC, slowing from an 18% surge in the previous quarter.
Hermes's first-quarter sales miss was published days after sector bellwether LVMH reported disappointing figures, amid uncertainty in the global economy marked by trade tensions and recession fears.
Speaking to journalists on a call, du Halgouet said that going into April, the company has not observed any significant change in shopper behaviour in the United States, where it still saw double-digit growth, partially limited by low inventories.
"Of course, we are cautious about the United States given the discussions, the geopolitical uncertainty which, as you know, have caused a great deal of volatility on the financial markets," he said.
The U.S. tariffs could include a 20% charge on European fashion and leather goods and 31% for Swiss-produced watches if fully applied.
Last week, Trump paused most of his tariffs for 90 days, setting a general 10% duty rate instead.
Commenting on China, another key market, which is weighed down by a real estate crisis weighing on the sector, du Halgouet said he has not seen any major signs of improvement, but added that recent government efforts to boost spending were a positive sign.
($1 = 0.8801 euros)
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