LVMH Has No Plans to Raise Prices Like Other Luxury Brands

LVMH Moët Hennessy Louis Vuitton SA said this week that it has no plans to harmonize global prices on its luxury goods, damping speculation that the luxury juggernaut would mirror French rival Chanel by raising prices in Europe while slashing them in China. “We do not think a unified price structure makes any sense,” LVMH Chief Financial Officer Jean-Jacques Guiony said in a conference call.

In recent weeks, analysts and industry observers have raised questions about the French firm’s pricing strategy after Chanel increased price tags in April on a number of its iconic handbags in Europe while reducing retail prices in China, in a bid to eliminate a growing price gap between Europe and Asia caused by the weakened euro.

At the time, Chanel’s policy was seen as a possible precursor for the wider luxury industry as the drop in the euro against the dollar and other currencies has led the cost of brand-name accessories to vary greatly between Paris, Beijing and New York. Though handbag prices have always been higher in markets beyond Europe’s borders, the current differential is significantly larger than historical norms.

The weak euro, in addition to hefty Chinese import duties, has exacerbated the existing gap for consumers from mainland China—a key market for the business and leading Chinese consumers to stock up on luxury goods, especially handbags, during trips to Europe. The price gap also has caused the parallel market to mushroom, with individual buyers reselling their oversees purchases through online websites such as Taobao, a Chinese retail site that is similar to eBay.

Nonetheless Mr. Guiony said that any decision regarding price policy for LVMH must not be rushed.

“What currencies have done, currencies can undo,” he said, when commenting on the company’s first-quarter sales.