Luxury brands hike prices as sales rebound

22 February 2022, Mumbai:

The quick rebound in sales has led to a hike in prices of luxury brands from Louis Vuitton to Gucci and Carter. As per UBS analysts, top brands including the LVMH-owned Louis Vuitton have raised their prices two-and-a-half times than the inflation rate over the past 20 years.

LVMH recorded sales worth €64 billion ($72 billion) and a profit of €12 billion last year, both exceeding pre-pandemic levels.

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The French company also owns a broad range of spirits, perfume, jewellery and cosmetics products.

Owner of Gucci, Yves Saint Laurent, Kering also beat its pre-COVID levels to clock a net profit of €3.2 billion euros and sales of €17.6 billion.

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The company creates a new collection for every season and reviews all price matrices.

Hermes’ profits reached € 2.4 billion while sales touched €9 billion. The brand raises its prices once a year. It is less susceptible to rising energy and raw material prices than other brands, says Axel Dumas, CEO.

Owner of the brand Carter, Swiss group Richemont’s sales increased 38 per cent in third quarter to € 5.6 billion. The prices of Rolex increased by over 3.0 percent on average at the start of 2022 while Chanel recently saw an aggressive hike in prices of iconic bags

In November 2021, consultancy firm Bain & Company forecasted, the luxury goods sector would grow by 6.0-8.0 percent annually and expand to €360-380 billion by 2025.

However, the rising prices may hurt sales, opines Arnaud Cadart, Fund Manager, Flornoy.

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