A potential hike by the world’s largest luxury brand will have a ripple effect across the sector.

LVMH Moët Hennessy Louis Vuitton SE (LVMUY) signaled it may raise product prices to offset tariff pressures. As the world’s largest luxury brand, its move could influence pricing strategies across the broader luxury retail sector.

According to a Reuters report, Deputy CEO Stephane Bianchi told members of the French parliament on Wednesday that the luxury group can increase prices by 2% to 3% annually.

Bianchi and CFO Cecile Cabanis said it is harder to raise prices for lower-cost products than for the most expensive items, and they still cautioned that "this does not mean the (price) elasticity is infinite.”

Consumers of luxury goods typically have higher purchasing power and the capacity to absorb price hikes.

Earlier this week, U.S. President Donald Trump threatened to impose a 50% tariff on imports from the European Union next month. He backed down soon after and restored the July 9 deadline, allowing trade negotiations to progress between the two sides.

The move comes as LVMH reportedly informed investors and analysts that weakness in the business persists and its China market continues to underperform.

LVMH, which owns Louis Vuitton, Dior, and Tiffany and towers with over $90 billion in annual revenue, missed sales expectations last quarter.

LVMH’s revenue in the region, including China, fell 11% last quarter. The company recorded a similar drop for 2024. According to the report, the area that includes China accounts for about 30% of LVMH's total sales, while the U.S. garners 24%.

On Wednesday, executives said LVMH still plans to continue investing in China, although they acknowledged that Chinese consumers were spending and traveling less than previously.

On Stocktwits, the retail sentiment for LVMUY was 'bullish.'

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