Hermès Q1 Sales Climb 7.2% Ahead of Planned U.S. Price Increase
Key Takeaways:
- Hermès reports 7.2% Q1 sales growth at constant exchange rates, reaching €4.13 billion — a slower pace compared to previous quarters but still ahead of many peers.
- U.S. prices to rise 10% starting May 1 in response to newly implemented tariffs, with Hermès indicating further hikes may be considered depending on policy changes.
- Strong U.S. performance in Q1 with 11% sales growth, particularly in March, despite temporary store closures and tight inventory earlier in the quarter.
- Mixed regional performance: Europe (excluding France) up 13%, Japan up 17%, France up 14%, while sales in China rose just 1% amid continued consumer softness.
- Leather goods and ready-to-wear lead gains, while fragrance and watches underperformed, the latter dropping 10% despite new product launches.
- Hermès plans to open three new production facilities in France and hire 1,500 employees to support continued demand and expansion.
As new U.S. tariffs take effect, Hermès has announced a 10 percent price increase across its American boutiques starting May 1. The French luxury house confirmed the move during its Q1 earnings call, citing the rise as a direct response to the blanket levy imposed on imported goods beginning April 5.
The increase applies only to the U.S. market and spans all product categories, from handbags to ready-to-wear. Hermès executives emphasized that no similar price hikes are planned for other regions, although they left the door open for further adjustments if tariff rates rise to the proposed 25 percent in July. “We are calculating things,” said executive VP of finance Eric du Halgouët.
Sales in the U.S. climbed 11 percent in the first quarter at constant currency, showing solid momentum in March despite economic uncertainty. However, overall group revenue growth slowed to 7.2 percent, reaching €4.13 billion, slightly below analysts’ expectations. The results contrast with the brand’s strong Q4 2024 performance, when sales surged 18 percent.
Hermès attributed slower U.S. growth in January to supply chain tightness and “climate events” including wildfires in Los Angeles and a Florida blizzard, both of which temporarily shuttered stores. Despite those headwinds, recent restocks and a 6 percent price increase have been met with continued demand, signaling resilience among the brand’s high-net-worth clientele.
Outside the U.S., Hermès saw strong performance in Europe (up 13 percent excluding France), France itself (up 14 percent), and Japan (up 17 percent). Growth in the Middle East also held steady at 14 percent. Mainland China, however, proved more challenging: Q1 sales were up just 1 percent as consumers remain cautious amid a sluggish real estate sector and reduced travel to Macao and Hong Kong.
Du Halgouët said China’s recent consumer stimulus policies could bolster sales in the coming quarters, noting government moves to adjust minimum wage levels, offer subsidies for families, and promote high-growth sectors like AI and tourism.
In terms of category performance, leather goods continued to lead with a 10 percent rise, bolstered by new designs like the Médor and Mousqueton bags. Ready-to-wear rose 7 percent, jewelry gained 6 percent, and silk and textiles grew 5 percent. Beauty and fragrance sales were flat, while watches lagged behind with a 10 percent decline.
Despite the softer quarter, Hermès is maintaining an ambitious medium-term growth outlook and plans to open three new manufacturing sites in France, aiming to hire 1,500 new employees. CEO Axel Dumas reaffirmed the brand’s long-term focus, stating: “In a complex geopolitical and economic context, the house is strengthening its fundamentals more than ever.”