With new tariffs raising the cost of European luxury goods in the U.S., American shoppers may soon be booking flights instead of heading to Fifth Avenue.
Hermès reported $4.37 billion (€4.1 billion) in revenue for the first quarter of 2025, up 9% at current exchange rates and 7% at constant rates. But beyond overall growth, the company’s earnings call shed light on the company’s prizing strategy in the U.S. as a result of rising import tariffs.
On April 9, the U.S. enacted an additional 10% tariff on European luxury imports. A potential 20% tariff is still under consideration. In response, Hermès said it will raise prices in the U.S. across all product categories starting May 1. “The idea is just to fully offset this impact with this increase of price on all the different métiers,” said Carole Dupont-Pietri, director of financial communications and investor relations.
Hermès is likely just the first mover. “I expect virtually all luxury goods brands to follow the Hermès lead and adjust prices to integrate the higher import duties,” Luca Solca, senior analyst at Bernstein, told Glossy. “On the margin, this could give American consumers a higher incentive to purchase in Europe and avoid tariffs this way.”
That would only accelerate an existing trend. In the latest quarter, Hermès saw double-digit growth in Europe, with revenue up 13% excluding France and 14% in France. The company credited the increase to a mix of sustained local demand and growing tourist traffic, particularly from the U.S. and the Middle East.
“We can observe that in the U.K., Italy, Germany, Switzerland, Spain, Austria and so on. It’s a homogeneous growth throughout all the countries in Europe,” said Eric du Halgouët, evp of finance. “And the biggest nationality in terms of export sales are the Middle East and the U.S.”
That could accelerate if price differences widen between continents. A U.S. shopper buying a Birkin or a Kelly in Paris could soon save several hundred dollars compared to buying the same item domestically, even before factoring in VAT refunds. The new levy will make the current price discrepancy amount even larger.
Despite the uncertainty, Hermès is pressing forward with its U.S. strategy. The company plans to open new stores in Phoenix and Nashville in the second half of the year. After weather-related disruptions and low stock levels slowed U.S. sales early in the quarter, March delivered a strong rebound. All categories posted solid growth in the U.S., according to the company.
Hermès is staying cautious about future growth. “We remain very conservative whilst keeping this ambitious growth target,” said du Halgouët. “We’re not looking at double-digit growth, just single-digit growth.” The brand did not mention an exact projected growth percentage on the call.
