Hermès stock (FR:HMS) slipped on Thursday after the French luxury giant made it clear it isn’t flinching in the face of fresh U.S. tariffs. The company said it plans to fully pass the cost of the new duties onto American shoppers—without blinking. That means higher price tags across all its products, from handbags to horse saddles, starting May 1.
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“We are going to fully offset the impact of these new duties by increasing our selling prices in the United States,” Hermès CFO Eric du Halgouet told reporters, according to Reuters. This comes just days after President Donald Trump’s administration announced sweeping tariffs on luxury goods, with potential 20% to 31% charges looming over French and Swiss imports.
Hermès Bets on Pricing Power to Protect Margins
While other luxury brands might be forced to swallow part of the cost, Hermès is leaning into its ultra-exclusive status. Its signature strategy—tight control over production and low volume—gives it the pricing firepower few can match. The company typically raises prices around 6–7% a year. But this hike is different. It’s all about shielding margins from geopolitical blowback.
That pricing strategy isn’t just about revenue. It’s about protecting Hermès’ carefully curated aura of scarcity. The company said it will stick to its controlled output pace, growing production by just 6–7% annually to maintain exclusivity.
Still, the first-quarter numbers show cracks. Hermès reported €4.1 billion in sales for the period ending March, a 7% rise on a constant currency basis. That missed analyst expectations for nearly 10% growth, according to VisibleAlpha data cited by HSBC. JP Morgan analysts said the results were “not up to the usual Hermès standards.”
China Disappoints While Europe Holds Up
Much of the drag came from China, where Hermès saw little sign of improvement. The real estate slump continues to weigh on high-end spending. Meanwhile, European sales were lifted by American tourists enjoying the strong dollar—though Hermès warned that boost may fade as the dollar weakens.
Despite the headwinds, Hermès shares its crown with the best. After LVMH’s recent stumble, Hermès briefly overtook it as the world’s most valuable luxury brand by market cap.
Luxury Brands Cater to Less Price-Sensitive Clients
Luxury brands like Hermès cater to a clientele that’s far less price-sensitive, which means higher price tags often don’t dent demand. When your customer base is shelling out five figures for a Birkin, a tariff-driven markup isn’t likely to scare them off. In economic terms, Hermès is leaning on its ultra-low price elasticity—and that could help the stock stay resilient, even in a choppy trade environment.
Is Hermes Stock a Good Buy?
Analysts remain cautiously optimistic about RMS stock, with a Strong Buy consensus rating based on 11 Buys, four Holds, and one Sell. Over the past year, RMS has decreased by 1%, and the average RMS price target of €2,770.95 implies an upside potential of 20.4% from current levels.
