Coach lifting prices as luxury goods hit four-year high

The US-based luxury brand Coach is reportedly looking to raise prices of product lines globally, with an average increase of 7 to 8 percent.

The price of some women's handbags could be boosted by 10 percent, reported 21st Century Business Herald.

Coach denied the rumor that prices of products in China will jump by 20 percent but said it plans to start a global price adjustment from July 15 due to rising material costs and freight expenses, the report said.

Overall, the average price of luxury goods has hit a four-year high, which climbed by 7 percent compared to 2020's average rate, and 25 percent since 2019, said recent research by data company Edited.

Earlier in May, the chief executive at Coach owner Tapestry said the mid-luxury brand has enough room to raise prices after the company recorded a 13 percent rise in net sales for its financial third quarter ended on April 2, thanks to an 11 percent growth from Coach. "We continue to see pricing power across the portfolio," said Tapestry chief executive Joanne Crevoiserat in a post-earnings call at that time.

"Importantly, we have seen no negative impact on customer demand from these price increases." The price increase would also help the brand to offset inflationary cost pressures, Crevoiserat said.

Markups have become the norm in the luxury market as major brands have raised prices throughout the coronavirus crisis to protect margins and, more recently, to counter rising costs in the inflationary environment.

European luxury brands including Chanel, Prada, Louis Vuitton and Dior have raised their prices this year despite the weakening of the euro, which could give foreign visitors more buying power and spur sales locally.

The euro has dropped more than 12 percent against the dollar this year and fell below parity against the dollar last week for the first time in almost 20 years, battered by growing recession fears in the euro area.

French luxury group Chanel raised prices in March for some of its products after three price rises in 2021, meaning some of its signature handbags now cost up to twice what they did before the pandemic in 2019.

Prices were raised by 6 percent in the eurozone and 2 percent in Hong Kong. Prices remained unchanged in China and the United States.

Analysts said that Chanel has been more aggressive than rivals, in a move that they say also aims to increase the exclusivity of the brand.

Analysts at Jefferies said Chanel has increased the prices of its iconic handbags by an average of 71 percent since before the pandemic.

In Hong Kong, the small classic handbag cost 96 percent more than at the end of 2019.

Despite aggressive prices, Chanel handbags were considered one of the top investment products to counter high inflation, said a report in June by the Credit Suisse Research Institute in collaboration with Deloitte.

"We find that Chanel handbags, traditional Chinese works of art and wristwatches offer the best inflation protection, while fine wines, modern and contemporary art, and American and Latin American art tend to suffer in high-inflation regimes," the report said.