“Considering the pricing power of Louis Vuitton and the desirability of the brand, we view the price increase as a positive for LVMH.”
That’s how luxury analysts at Barclays reacted to news that the French luxury giant would hike prices worldwide to reflect inflation, and rising production, raw material and transportation costs.
According to Barclays’ first “channel check,” prices for Vuitton’s signature bags increased by 10 percent on average with key item like the Neverfull going up by as much as 20 percent. The price hikes were first reported by Reuters.
For example, leather Capucines handbags now retail for 5,500 euros, up from 4,500 previously, while canvas Neverfull bags now carry a sticker of 1,500 euros, versus 1,250 euros before the increase.
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“I think this price increase shows confidence on consumer demand and should be seen as a positive,” agreed Luca Solca, senior research analyst, Global Luxury Goods at Bernstein.
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Citing a range of company and media sources, Barclays said it expects a raft of luxury companies to also increase prices in the range of 3 percent at Hermès International, and 5 to 6 percent at Tag Heuer for most timepieces. Prada and Moncler have only indicated average prices would rise this year.
Chanel, Dior and Celine recently raised prices of some of its iconic leather bags, Barclays noted.
Pricing power is a key attribute of luxury goods, and Europe’s biggest players have been reporting robust business.
Reporting fourth-quarter and full-year results last month, LVMH Moët Hennessy Louis Vuitton reported organic growth of 51 percent in the fourth quarter at its fashion and leather goods division, marking a sharp acceleration versus previous quarters, boosted by marquee brands Louis Vuitton and Dior, a record year at Celine and Fendi, and a strong performance at Loewe and Loro Piana.
Kering is slated to report its 2021 results on Thursday, and Hermès International on Friday.
Prices for Chanel’s Medium Classic Flap rose three times in 2021, moving from $6,800 to $8,800.
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