(Bloomberg) — Hublot’s Big Bang watch, worn by Usain Bolt and Jay-Z, will soon be offered at an even higher price.
The Swiss watchmaker is raising the prices of all of its watches, Hublot chief executive Ricardo Guadalupe said in an interview. Rising commodity costs for gold and diamonds will drive price increases of 3% to 4% in April or May, he said. Hublot products sell for an average of around 20,000 francs ($21,500).
“Almost all of our suppliers are raising prices,” Guadalupe said, noting that steel and titanium costs are also rising. Diamond suppliers have raised their prices by 10-15%, he said.
Hublot’s move shows how even the luxury industry is facing inflation amid rising commodity prices and supply chain issues caused by the pandemic. At the same time, deep-pocketed consumers who cut back on spending during the lockdowns are now snapping up high-end products, including Swiss watches, driving up demand.
“The main issue is production and the supply chain,” Guadalupe said, adding that almost all of Hublot’s high-end Swiss rivals are expected to raise prices. “We have to do it anyway, and since everyone is doing it, it’s okay.”
Speaking in a Bloomberg Television interview last month, Dior CEO Pietro Beccari said the couture brand will have to raise prices to match rising input costs, following in the footsteps of its rivals.
“It is true that desirable products have a certain price,” said Bernard Arnault, who heads LVMH, the owner of Hublot, during the presentation of the company’s annual results on Thursday.
The French billionaire said the group will be “reasonable” and “respect” its customers on price increases. But he acknowledged that some of the group’s products have a special allure, citing a Nautilus watch model launched by Tiffany with Patek Philippe with 170 pieces. Its retail price of $52,635 was greatly exceeded at a charity auction for more than $6.5 million last month.
Chanel recently made headlines for price hikes on some of its best-selling bags, increases that have far exceeded inflation rates over the past two years.
Hublot’s CEO said a rebound in demand made 2021 a year of record sales. It expects production to grow to single digits in 2022.
“We have more of a production problem today than a sales problem,” he said.
Stocks of Hublot watches have been reduced by 30% to 40% in 2021 in its boutiques and retailers, according to the CEO.
“The last three months have been incredible from a sales perspective,” he said.
Swiss watch exports have rebounded to record highs in value in 2021, amid strong sales in the United States and increased demand for watches priced above 5,000 francs. Hublot’s entry-level watches cost around 6,000 francs.
Hublot, which has a marketing relationship with tennis star Novak Djokovic, said there were no changes after he was forced out of Australia and unable to compete at the Australian Open because he was not vaccinated.
“At the moment we are supporting our ambassador,” he said.
The company has been in contact with the Serbian athlete after he left Australia and is waiting for him to make a statement regarding his playing future.
“If he can’t play anymore, that could be a problem, but let’s see,” Guadalupe said.
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