Luxury brands are raising prices in Japan as the country becomes a hotspot for tourist spending, fueled by a weak yen. 

WSJ reports that brands such as LVMH Moet Hennessy Louis Vuitton, Hermes, Richemont (the parent company of Cartier), and Gucci-owner Kering have all implemented price increases. 

While these luxury labels face sales declines in other countries, they’re experiencing a boost in Japan, where tourists are flocking to buy high-end goods at more favourable prices. 

“Most of our houses implemented tactical price increases to account for the weak yen,” said Armelle Poulu, CFO for Kering.

Meanwhile, Hermes CEO Axel Dumas said the brand still considers inflation and foreign exchange rates when setting prices. 

“We are already taking measures to cover ourselves for exchange-rate levels,” he added.

According to FactSet, the Japanese yen recently hit its lowest level against the dollar since 1986 and against the euro, reaching levels last seen in 1990.

This depreciation has led to a surge in tourist spending – particularly at luxury retailers in Tokyo’s Ginza district – where stores like Mitsukoshi have seen an influx of customers from abroad.

LVMH reported a 57 per cent sales increase in Japan during the second quarter, driven largely by Chinese tourists. From April to June, foreign tourist spending in Japan totalled a record 2.1 trillion yen, with Chinese visitors accounting for nearly 21 per cent. 

“We are happy with the growth generated in Japan, but it comes at a notable cost from a profit-and-margin perspective,” added Jean-Jacques, CFO, LVMH.

The Japanese government expects foreign tourist spending to hit eight trillion yen this year.