Birkin bag maker Hermes announced plans to raise prices by 5% to 10% in 2023 due to rising costs and currency fluctuations, much more than in the past, after surging sales in the third quarter with no sign of slowing.
Echoing upbeat comments earlier this month from rival Louis Vuitton’s owner LVMH, Hermes shrugged off concerns that the industry’s post-pandemic boom could cool due to the looming recession as US shoppers took advantage of the dollar’s strength in Europe and China rebounded sharply.
“We will probably have a price increase of 5% to 10%,” Hermes executive vice-president of finance Eric du Halguet told reporters, blaming rising costs and changes in exchange rates.
The company has so far been more conservative than peers that aggressively raised prices during the pandemic.
Hermes, which has waiting lists for its high-end handbags worth more than $10,000 and limits production to maintain exclusivity, has raised prices by about 4% this year and an average of 1.5% to 2% in previous years. That’s comparable to double-digit price increases at Chanel.
In another sign of confidence, Hermes said it would accelerate hiring in the second half after adding 800 people in the first six months and raising wages for all European staff in July.
Sales for the three months ended September were 3.14 billion euros, up 24.3% at constant exchange rates, more than double the 12% rise analysts had expected, according to a consensus cited by UBS . In Asia, excluding Japan, revenues rose 34% over the period, with China in particular rebounding strongly.