Cartier CEO sees luxury demand withstanding rising prices

Bloomberg

Cartier plans to raise prices in the next several weeks, making it the latest luxury brand to bet its customers are willing to spend more for their high-end watches, jewellery and accessories.
The “mild” price increase will partially offset the rise of the US and Chinese currencies against the euro, according to CEO Cyrille Vigneron. It will also help to cover higher costs for key materials, such as the diamonds, platinum and gold used in the company’s jewellery, including $275,000 bracelets and $104,000 earrings.
“We’re in a long-term business, and we have to be careful not to adjust our pricing too quickly,” Vigneron said in an interview. He previously said any potential price increases by Cartier would likely be between 3% and 5%. Some other European luxury houses have been more active — Chanel, for instance, has raised the prices on some its handbags by more than 50%.
Like many businesses worldwide, high-end brands and luxury watchmakers are raising their prices to counter a bevy of rising expenses — from currency fluctuations to the cost of materials, shipping and labour. While there are signs that lower-income consumers are feeling the squeeze from the highest inflation in decades, rising prices across the economy have yet to deter wealthier shoppers.
That’s sparked optimism at Cartier and other luxury brands, despite a growing list of potential hurdles to growth.
Shares in rival LVMH, which owns Tiffany & Co and Bulgari, rose after reporting strong revenue growth in spite of inflation, Chinese lockdowns and the war in Ukraine.
Cartier’s parent, Richemont, isn’t scheduled to release quarterly results until May.
In the long term, “we don’t see so many headwinds coming — hiccups for sure,” Vigneron said. “The overall growth of world wealth and the overall distribution is coming in favour of global luxury.” So far this year, he said, Cartier has had robust sales in the US, Europe, Middle East, South Korea and Japan.
Mercedes Abramo, Cartier’s North America CEO, said the region has showed “tremendous resilience.” That will help to counter an expected temporary dip in Cartier’s Asia business amid China’s Covid-19 lockdowns, Vigneron said. He’s confident the country will bounce back and help maintain global demand for luxury goods. He said Asia’s market has “probably the highest potential for growth” in the next five to 10 years.
In the US, Cartier is mulling more brick-and-mortar stores outside of major cities like New York, Miami and San Francisco.