Hermès, first quarter below expectations due to war in the Middle East
Revenues at EUR 4.07 billion, up 6% at constant exchange rates and down 1% at reported level. Share price plummets on the stock exchange
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Lower-than-expected results for French luxury group Hermès in the first quarter due to the impact of the conflict with Iran on consumption, particularly in the Middle East and in France, where the drop in tourist flows affected purchases of high-end goods. In Paris, the stock opened the session down 14%, before recovering slightly. However, it was still down more than 8 per cent at mid-day, dragging the luxury sector down with Kering down more than 9 per cent and Lvmh limiting its decline to 0.25 per cent. In London Burberry dropped 2.7 per cent, while in Frankfurt Hugo Boss was down 1.5 per cent. In Italia, Salvatore Ferragamo is down -1.6%, Moncler -1.4 percent and Brunello Cucinelli was positive.
Sales of iconic products such as Birkin and Kelly bags, silk scarves and perfumes grew by 6% at constant exchange rates, below the analysts' consensus (Visible Alpha) of a 7.1% increase. The negative exchange rate effect of EUR 290 million led to a 1% drop in reported revenue to EUR 4.07 billion from EUR 4.13 billion in the same period last year. However, the group saw double-digit growth in America, Japan and Europe (excluding France).
"In a tense geopolitical environment, Hermès maintains its course, staying true to its long-term strategy. Backed by a high level of creativity, uncompromising quality standards and the loyalty of its clientele, Hermès continues on its path of profitable growth in 2026 with confidence and determination. The fundamentals of the Hermès model are more than ever a distinguishing factor of strength," comments Axel Dumas, executive chairman of Hermès.
Hermès, which caters to an ultra-wealthy clientele with handbags starting at around $13,000, pointed out that the conflict-related slowdown in tourist flows particularly affected sales in airport concession outlets and in the Middle East, as well as in key markets such as the UK, Italia and Switzerland, where Gulf customers are a significant driver.
The Middle Eastern market
In geographical detail, the Middle East recorded a decline of 6% at constant exchange rates, with revenues of EUR 160 million compared to EUR 185 million in Q1 2025. Although accounting for only 4.4% of total revenue, the region had been the most dynamic for the group last year.
