Hublot CEO Ricardo Guadalupe said in an interview that the Swiss watchmaker is raising the price of all its watches. Rising raw material costs for gold and diamonds will lead to a 3 to 4 percent increase in prices in April or May, he said. Hublot's products sell for an average of about 20,000 francs ($21,500).
"Almost all of our suppliers are raising prices," Guadalupe said, noting that the cost of steel and titanium is also increasing. Diamond suppliers have raised prices by 10 to 15 percent, he said.
Hublot's move suggests that even the luxury goods industry is facing inflation in the face of rising commodity prices and supply chain problems caused by the pandemic. Meanwhile, cashier consumers who curbed spending during the lockdown are now snapping up high-end goods, including Swiss watches, driving a surge in demand.
"The main issue is production and supply chain," Guadalupe said, adding that almost all of Hublot's high-end Swiss watch competitors are expected to raise prices. "We have to do it anyway, and since everyone is doing it, it's acceptable."
In an interview with Bloomberg Television last month, Dior CEO Pietro Beccari said the haute couture brand would have to follow in the footsteps of competitors to raise prices to match rising input costs.
"It's true that the ideal product has a certain price," Bernard Arnault, head of LVMH, hublot's owner, said at the company's annual results briefing on Thursday.
Respect for consumers
The French billionaire said the group would be "reasonable" and "respect" its customers when it comes to price increases. But he acknowledged the particular appeal of some of the group's products and cited the 170 Nautilus watch models launched by Tiffany & Patek Philippe. It retailed for $52,635 and was widely surpassed by selling for more than $6.5 million at a charity auction last month.
Chanel recently made headlines for the price increases of some of its best-selling bags, which have far outpaced inflation over the past two years.
Hublot's CEO said the rebound in demand made 2021 a record year of sales. He expects production to grow in high single digits by 2022. By 2021, hublot inventory in its boutiques and retailers will be reduced by 30% to 40%.
The export value of Swiss watches rebounded to record levels in 2021 due to strong sales to the United States and surge in demand for watches priced above 5,000 Swiss francs. Hublot's entry-level watches cost around 6,000 francs.
This article originated from the financial world