The Wall Street Journal (WSJ) reported on the 20th (local time) that luxury brands recorded positive sales despite rising prices due to global inflation and supply chain turmoil.
According to WSJ, luxury brands such as Hermes announced that its sales in the third quarter of this year were 3.14 billion euros, up 24% from the same period last year. Kering, Gucci’s parent company, also posted sales of 5.14 billion euros, up 14 percent from the same period last year. Louis Vuitton Moe Hennessy (LVMH) also posted sales of 19.76 billion euros in the third quarter, up 19% from the same period last year. Both Kering and LVMH have surpassed market forecasts.
Their increase in sales was attributed to American tourists’ explosive shopping in Paris and other places, thanks to the “super strong dollar.” The WSJ explained that major retail retailers were hit hard by inflation, supply chain problems, and Russia’s invasion of Ukraine, but luxury goods companies were not affected by the continued purchase of the wealthy.
The craze for luxury goods shopping is expected to continue for the time being. Eric Du Halgo, Chief Financial Officer (CFO) Hermes, said, “There are no signs of a slowdown at the moment.” LVMH CFO Jean-Jacques Gwiony also said, “Luxury sales are targeted at the wealthy who have their own behavior, so they are not affected by economic conditions or economic ups and downs.” He also said, “It can’t be said that it’s completely unrelated to the economic downturn, but based on past experience, the downturn in the luxury market didn’t last that long.”
In the meantime, each company is planning to raise prices. Hermes said immediately after the announcement of its performance, “We will increase product prices by 5 to 10% next year.” Hermes has already raised its price by 4% this year. Hermes traditionally raises prices every January, and the increase is usually only 1.5 to 2%.
Chanel raised the price of its flagship ‘classic flapback’ three times last year. Earlier this year, the price of ‘Coco Handle Bag’ was increased by 8 to 12%. In the case of Kering, he did not elaborate on whether to raise the price, but said the new collection would be an “opportunity to raise the price.”