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French luxury group LVMH has room to raise prices of high-end products by around 2-3 percent without likely affecting demand from luxury clients, but it would be difficult to lift prices of cognac or beauty products, company executives said on Wednesday.
“We can increase prices by 2 percent to 3 percent per year,” deputy CEO Stephane Bianchi told members of the French parliament in a hearing on Wednesday, when asked about his group’s ability to offset potential tariffs.
Citing the example of high jewellery, Bianchi said buyers of the group’s most expensive products would absorb such price hikes, but cautioned that “this does not mean the [price] elasticity is infinite.”
US President Donald Trump this week backed away from his threat to impose 50 percent tariffs on imports from the European Union next month, restoring a July 9 deadline to allow for talks between Washington and the 27-nation bloc to produce a deal.
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Raising the prices of lower-priced beauty products and cognac would be more complicated, added finance chief Cecile Cabanis, saying, “The capacity to raise prices is not there.”
LVMH executives said they still plan to continue investing in China, although they had noticed that Chinese consumers have been travelling and spending less over the past three months.
Demand in the United States, however, showed the first signs of a rebound, but as long as trade tensions with the European Union over threatened tariffs are not being eased, the climate will remain difficult, said Bianchi.
By Tassilo Hummel and Mimosa Spencer; Editing by Kirsten Donovan
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