Even as sighs increase over economic difficulties, luxury goods sell well... Hermes and Gucci see a leap in performance

Surge in US Tourists' Luxury Purchases in Europe Amid Dollar Strength
Luxury Brand Price Hikes Grow Larger and More Frequent

Despite concerns about an economic recession, sales of high-end fashion brands have increased. LVMH (Louis Vuitton Mo?t Hennessy) reported third-quarter sales of 19.76 billion euros (approximately 27.8 trillion won).
[Image source=Getty Images]

[Asia Economy Reporter Yoon Seul-gi] Despite the ongoing global high inflation and growing concerns about an economic recession, luxury fashion brands such as Hermes, Gucci, and Louis Vuitton continue to show growth.

On the 20th (local time), according to the Wall Street Journal (WSJ), Hermes announced that its third-quarter sales increased by 24% compared to the same period last year, reaching 3.14 billion euros (approximately 4.4 trillion KRW).

Gucci's parent company, Kering, also exceeded market expectations with sales of 5.14 billion euros (approximately 7.4 trillion KRW), up 14% from the same period last year. Louis Vuitton Moet Hennessy (LVMH) reported third-quarter sales of 19.76 billion euros (approximately 27.8 trillion KRW), a 19% increase from the previous year, surpassing the market consensus of a 13% increase.

WSJ analyzed that the increase in sales of high-end fashion brands was due to the ultra-strong US dollar, which led to an explosive rise in luxury purchases by American tourists in places like Paris, France. Although concerns about the global economic recession and the impact of the 'zero-COVID' policy on the Chinese market caused Hermes and Kering's stock prices to plunge by 15% and 35% respectively this year, the continued purchases by the wealthy have limited the overall impact.

Jean-Jacques Guiony, CFO of LVMH, stated, "Luxury sales target the wealthy, who have their own unique behavior patterns, so they are not affected by economic conditions or market fluctuations. Of course, it cannot be said that they are completely unaffected by recessions, but based on past experience, downturns in this market have not lasted very long."

Meanwhile, immediately after announcing its earnings, Hermes revealed plans to raise product prices by about 5-10% next year. Hermes' usual price increase range is around 1.5-2%, but after raising prices by about 4% this year, the increase rate has also grown. Chanel is shortening both the price increase rate and the frequency of price hikes. Earlier this year, prices for the 'Coco Handle' bag and the 'Business Affinity' bag were raised by 8-12%, and last year, the price of the iconic 'Classic Flap' handbag was increased three times. Kering avoided specific comments on future price hikes but said that new collections would provide opportunities for price increases.

This content was produced with the assistance of AI translation services.