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Image: Louis Vuitton

Louis Vuitton will introduce price increases this week, the French luxury goods brand announced on the heels of recent confirmation from LVMH’s chairman that broad price tag hikes were in the works. Beginning on Wednesday, the price increases “will affect Louis Vuitton stores worldwide and cover leather goods, fashion accessories and perfumes,” a spokesperson for the brand revealed on Tuesday, noting that the boosts to prices will “vary depending on the product.” The increases come, per Reuters, as a result of increased “changes in production costs, raw materials, transportation, as well as inflation.” 

Late last month in presenting LVMH’s full year earnings, chairman Bernard Arnault said that he believes the French luxury goods conglomerate “has enough wiggle room to raise prices” – which has been a common move across the luxury landscape over the past couple of years, in particular – “and to protect its margins in an inflationary environment.” He cautioned, however, that management has to “remain reasonable” when it comes to boosting prices of the group’s offerings in the year ahead. 

image via Bernstein

In addition to Louis Vuitton, LVMH-owned watch brand Tag Heuer confirmed that it has price increases in the works. Arnault’s son, Frédéric Arnault, who serves as CEO of the Swiss luxury watchmaker, said in an interview on February 11 that the brand raises it prices “regularly” and that there will be price increases of 5 to 6 percent on most of the brand’s watch offerings in April. Elsewhere in the watch division, LVMH’s Hublot brand will introduce increases, with CEO Ricardo Guadalupe saying earlier this month that “rising raw material costs for gold and diamonds” will prompt the brand to increases prices across its range of watches by 3 to 4 percent in April or May. 

Both of these confirmations come in the wake of LVMH Watches and Jewelry division president Stéphane Bianchi announcing a new structure for the Watches and Jewelry division, which consists of Bulgari, TAG Heuer, Hublot and Zenith, and the jewelry brands Chaumet and Fred, and a focus on higher-priced products. He told the New York Times that the “average price” of the group’s watches “is increasing every year.” 

On the Fashion and Leather Goods front, Christian Dior – which is the second largest brand in LVMH’s top-revenue-generating division following only behind Louis Vuitton – is also expected to raise its prices in the not-too-distant future. In a note early this month, Bernstein analyst Luca Solca stated that thanks to the strategy that has been envisioned and implemented in recent years by CEO Pietro Beccari and creative director Maria Grazia Chiuri, Dior has “resonated with consumers and has been in recent years the hottest brand in the high-end,” which has come “hand in hand with continuing increases in pricing to further establish the brand’s high-end credentials.” 

Dior has been implementing prices hikes for its bags, such as the Medium Lady Dior, which is up by almost $1,500 from 2019 (with a compound annual growth rate of 10 percent between then and now). Rising price tags are particularly noticeable in China, Bernstein states, where the CAGR for certain models, such as the Medium Lady Dior, amounts to 20 percent between November 2019 and January 2022.  

Most recently, Jefferies’ analysts Kathryn Parker and Flavio Cereda revealed that Dior raised prices of some of its iconic leather bags on January 18, with price rises occurring “across all global markets and were lowest in the UK and highest in South Korea.” (In terms of mainland China, Parker and Cereda noted that the impact on price there was “close to the average,” making it so that “there was only a minor reduction in the China-France price differential.” They do not expect that this will continue to be “a future trend.”)

As for the bright spot of price boosts going forward, Bernstein states that despite existing rises coming from Dior, it still “offers the highest pricing upside,” particularly among the three brands that it puts at the top of the soft luxury pyramid (Hermès, Chanel, and Dior), as the Lady Dior bag, for instance, is still sold today at a 30 percent discount to its Chanel counterpart. Dior is also expected to thrive, in part, thanks to the aggressive price hikes that continue to be implemented by Chanel, which has  increased the pricing of its classic models four times and more than 50 percent since the pandemic started, thereby, “bringing them in line with a Birkin/Kelly 2.” Not all consumers have been amused by Chanel’s enduring price hikes, with some claiming that its attempts to compete more closely with Hermès on pricing and distribution come without necessary increases in quality to command such pricing. This could prove to be a boon for Dior (and LVMH more broadly), should consumers opt to swap in Lady Dior bags for Flap bags.

And on a final note about Louis Vuitton, the brand did not specifically address whether strife among workers for the brand has impacted its rising “production costs” on Tuesday. The news of price hikes follow closing from reports form industry outlets on Thursday that “several hundred workers from three of Louis Vuitton’s 18 factories in France staged a walkout organized by the CGT and CFDT trade unions, demanding better wages and protesting against the changes in working hours proposed by the management.” In a corresponding statement this week, Louis Vuitton revealed that it “has offered an average [salary] rise of €150 per month, coupled with a reduction in working hours from 35 to 33 hours per week,” noting that it is “committed to preserving its employees’ “work-life balance.”