S Preps For Potential Price Rise In The U.S. In Face Of Tariffs

As tariffs take hold in the U.S. with a blanket levy for all imported goods imposed from April 5, Hermès International will up its prices to correspond with the 10 percent tax starting May 1.

"The increase of price will be across all the different metiers," said head of investor relations Carole Dupont-Pietri in a conference call with analysts on Thursday morning.

The percent price rise will only apply to the U.S. market. "It's aimed at offsetting the increase in tariffs that only applies to the American market, so there won't be price increases in the other regions," she said.

The 10 percent will be applied to the transfer price and result in various retail price bumps, depending on product category. "We are calculating things," said Hermès executive vice president of finance Eric du Halgouët.

"The tariff levels have not been set in stone.…We remain cautious," said du Halgouët added, alluding to the 90-day reprieve on the proposed 25 percent rate. He hedged on whether prices would increase further if the 25 percent rate goes into effect in July.

"In absolute terms Hermès delivered a robust sales print at plus 7 percent, but it is low by its own high standards and is a slight miss to the investor bar," said Deutsch Bank analyst Adam Cochrane in a note.

The slight miss sent shares down 3.2 percent by market close, given that Hermès has largely exceeded analysts' expectations in the past.

Du Halgouët indicated that number was slower than expected due to "climate events," including the fires in Los Angeles, which saw the closure of Hermès' Beverly Hills and Topanga stores, as well as the blizzard in Florida. Both events occurred in January, when the company was also impacted by tight stock in the U.S. after a booming holiday period.

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