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Louis Vuitton Hikes Japanese Prices By Most Ever On Plunging Yen

Tyler Durden's picture





 

A month ago, when we reported that Abe's reflation effort was "succeeding" if maybe a little too much by sending gasoline prices through the roof, the Nikkei's conclusion was that  "Households are beginning to feel pinched by the weaker Japanese currency." Today they are pinched that much more as we find that the effectiveness of the plunging Yen has just forced luxury titan LVMH to hike prices in Japan by the most ever. From Bloomberg: "LVMH Moet Hennessy Louis Vuitton SA raised some prices by an average 12 percent at its flagship brand in Japan, the unit’s biggest price hike, to offset the impact of the yen’s slide on sales. The Louis Vuitton brand raised prices Feb. 15, spokeswoman Kaori Fuse said. Retailers such as LVMH, the world’s biggest luxury goods maker, are confronting a plunge in the yen that undercuts the value of sales in Japan, the second-biggest market for personal luxury goods." And where ultraluxury goes, everyone else is sure to follow.

It remains to be seen just how much more of this relentless inflation the local population can stomach, considering the bulk of local assets is not in the stock market, but in such safe investments as bonds and deposits as shown in "Why 'This Time Won't Be Different' For Japan In Two Charts." It also remains to be seen just how much domestic sales will plunge at LVMH and elsewhere, when indexed for the new prices as the failure of Abenomics to translate inflation into higher wages. One thing is sure: with at least a several quarter delay before any of the incipient inflation can translate into personal consumption, one wonders: will the Abe government last long enough to offset increasing household anger resulting from soaring prices before sellers' remorse settles in, and Abe's repeat appearance at the helm of the Japanese government is once again cut prematurely short.

More:

“There’s a risk of a currency battle” after the yen plummeted at the end of last year, LVMH Chief Executive Officer Bernard Arnault said Jan. 31.

 

“We are an importer, so the weakening yen and rising raw material prices are part of the reason for the price increase,” Louis Vuitton Japan’s Fuse said in a phone interview. The increase is the largest since the Japan unit was established in 1978, said Fuse, who declined to comment on individual product prices.

 

The yen has dropped about 13 percent against the dollar in the past three months, the worst performance among 16 major currencies tracked by Bloomberg.

 

The last time Louis Vuitton raised prices in Japan was in August 2011, when the business added 3.8 percent to the price of watches and fine jewelery. Fuse said the company regularly reviews pricing and that in November 2008 it lowered the price of leather goods and accessories by about 7 percent in Japan.

And the obligatory spin punchline:

Analysts said the higher price increases probably wouldn’t drive away customers. “Brand goods have low price sensitivity,” said Dairo Murata, a retail analyst at JPMorgan Securities Japan Co. “People who buy those brands won’t be so frugal as to care about another 10,000 yen.”

When was the last time analysts were ever wrong. But at least they didn't add that higher prices will add to even more demand.

LVMH appears to be alone for now:

The Japan units of Tiffany & Co. and Hermes International SCA aren’t considering raising prices at the moment, according to company officials who asked not to be identified, citing company policy. A spokeswoman for Prada SpA declined to comment on the possibility of higher prices.

We look forward to updating this space when rhetoric gives way to simple bottom line math, and everyone else does what LVMH just did.

As for the average Japanese household, that which is not shopping with "low price sensitivity" at LVMH, Prada or Hermes, one fails to see just how soaring prices will encourage them to stimulate the local economy.

 


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Tue, 02/19/2013 - 10:23 | Link to Comment Sudden Debt
Sudden Debt's picture

Japanese recovery....

looks a bit like after the emergency room gone bad and now it's waiting for the worms to come stuff...

 

Tue, 02/19/2013 - 10:25 | Link to Comment Manthong
Manthong's picture

Drudge posted a pic of the only designer bags that seem to matter anymore..

http://i.imgur.com/ZRdc2TO.jpg

Tue, 02/19/2013 - 10:37 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

Why would nerdy, zit-faced ZHers and silverbug prepper goons care about the price of premier fashion brands like LV? ZHers love to discuss the lives of the rich and famous because it makes them feel important. The truth is, world leaders and top business professionals have never even herd of Zerohedge, and would laugh in the face of any feeble ZHer who challenged them. ZHers need to learn to respect just authority until they have the political and academic credentials to challenge the higher echelons of society.

Tue, 02/19/2013 - 10:37 | Link to Comment francis_sawyer
francis_sawyer's picture

@Mathong

~~~

What the fuck does the teleprompter need a 'stand up' bag for?... You mean to tell me that they don't give him a golf cart?

Tue, 02/19/2013 - 10:42 | Link to Comment Fredo Corleone
Fredo Corleone's picture

Any gentleman knows that for some things, price is no object.

http://zuso.files.wordpress.com/2010/03/louis-vuitton-lv-monogram-pantyh...

Tue, 02/19/2013 - 10:25 | Link to Comment francis_sawyer
francis_sawyer's picture

Rooey Vuitton Infration!

Tue, 02/19/2013 - 10:28 | Link to Comment DeadFred
DeadFred's picture

Mrs. Watanabe is not happy

Tue, 02/19/2013 - 10:26 | Link to Comment youngman
youngman's picture

maybe they will go back to their wood clogs now...

Tue, 02/19/2013 - 10:28 | Link to Comment Strange-Currencies
Strange-Currencies's picture

There you go!  Achieving the 2% inflation target has just become more feasible, I guess...

Tue, 02/19/2013 - 10:33 | Link to Comment lunaticfringe
lunaticfringe's picture

Oh the inhumanity of it all. Looyey...Looyey...please reconsider. Is nothing scared?

Tue, 02/19/2013 - 10:36 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Looks like I won't be using Feather blades with my safety razor anymore....

Tue, 02/19/2013 - 10:36 | Link to Comment GrinandBearit
GrinandBearit's picture

 I always laugh when I travel and see these things on the plane.  Why anyone would buy this overpriced, plastic garbage is mind boggling to me.  People are out of their minds. 

Tue, 02/19/2013 - 11:49 | Link to Comment DaveyJones
DaveyJones's picture

if this was the only stupid thing people did, we'd be OK

Tue, 02/19/2013 - 10:36 | Link to Comment Cursive
Cursive's picture

Unless we've finally hit another Minsky Moment, the increase in sales prices will cause Japanese retail sales to be "better than expected."  Just another way that inflation biases mask underlying economic problems.

Tue, 02/19/2013 - 10:41 | Link to Comment DaveyJones
DaveyJones's picture

puking in your purse strings

Tue, 02/19/2013 - 10:47 | Link to Comment NoWayJose
NoWayJose's picture

Coming to Amerika!

Tue, 02/19/2013 - 11:01 | Link to Comment Sudden Debt
Sudden Debt's picture

louis-vuitton... HAS ALMOST EVERY BASIC ITEM FOR EVERY PREPPER!!

Tue, 02/19/2013 - 13:17 | Link to Comment willwork4food
willwork4food's picture

They sell beer in bulk?

Tue, 02/19/2013 - 14:45 | Link to Comment Bunga Bunga
Bunga Bunga's picture

No joke, wait for the minimum wage hike, Anheuser-Busch will follow.

Tue, 02/19/2013 - 10:52 | Link to Comment Shevva
Shevva's picture

HA you Tylers have no idea according to the MSM the sheeple should be investing in the Japanese stock market.

http://www.dailymail.co.uk/money/investing/article-2280634/Japan-focused-fund-investment-trust-tips-investors-want-chance.html

Durgh, don't you know anything.

Tue, 02/19/2013 - 11:08 | Link to Comment falak pema
falak pema's picture

Louis Vuitton only targets the 0.1 % + their 2% bag carriers. These guys get rich when the inflation hits all the others. 

So LV can afford to feed their hubris. Xtra luxury thrives on inequality.

Tue, 02/19/2013 - 12:11 | Link to Comment DaveyJones
DaveyJones's picture

"I'm just a 2% bag carrier"  - that's good

should be a bumper sticker 

or the Elton John album

Don't kill me, I'm just the 2% 

Tue, 02/19/2013 - 11:27 | Link to Comment yrbmegr
yrbmegr's picture

Suppose LVMH Moet Hennessy Louis Vuitton SA merged with Yves Saint-Laurent.  Would the resulting company be LVMHYSL Moet Hennesy Louis Vuitton Yves Saint-Laurent SA?  And then suppose they bought BCBG Maxazria.  What's in a name?  Apparently everything.

Tue, 02/19/2013 - 11:29 | Link to Comment dark pools of soros
dark pools of soros's picture

bullish for China knockoff contraband

Tue, 02/19/2013 - 11:34 | Link to Comment Meat Hammer
Meat Hammer's picture

I skipped right past the article because I knew all of the japanese-accent-raden comments would be hiralious.  

Tue, 02/19/2013 - 11:40 | Link to Comment e-recep
e-recep's picture

wages in japan were (almost) frozen for quite some time now. i guess they'll remain stagnant. a tsunami of price hikes will hit the japanese hard. expect to see less japanese tourists all around the world.

Tue, 02/19/2013 - 11:56 | Link to Comment flrzero
flrzero's picture

At a Hermes store around the corner from me in Tokyo: a scarf that costs circa $400 plus local sales tax in the US goes for 50something thousand yen incl 5% tax. So PPP in the luxury segment requires a yen around 120. I wonder if LVMH or Hermes dropped prices post 2008 when the yen strengthened. I seriously doubt it.

I noticed that a wine store advertised "price cuts due to strong yen" when the EUR was below 100 last summer.

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