Accounts effect on luxury, Kering and Hermes plunge in Paris

(Il Sole 24 Ore Radiocor) - The luxury goods sector came under pressure as sales hit Europe's main stock markets. The sector's Euro Stoxxx fell 4.3%. In Milan, with the FTSE MIB little moved, sales hit Moncler and Brunello Cucinelli . Also dropping were Hugo Boss, which in Frankfurt dropped 1%, while Burberry in London dropped 2.5%. But it is French companies that are the worst performers with Kering and Hermes slumping on the CAC 40 . The former gives up 9.6%; the latter marks -10.54%. Both were weighed down by the lacklustre first-quarter accounts. Sales also hit Lvmh .

Going in order, Kering reported that turnover for the first three months of the year stood at EUR 3.56 billion, declining 6% at current exchange rates or stable on a like-for-like basis compared to the same quarter in 2025. This was impacted by the Gucci brand, which posted sales of €1.35 billion in the first quarter, down 14% at current exchange rates and 8% on a like-for-like basis compared to the first quarter of the previous year. Geographically, retail sales in the Middle East region fell 11% in the first quarter, after increasing in the first two months of the year, affected by the conflict at the end of February, "a cause for concern for the group".

"In a geopolitical and macroeconomic environment that remains uncertain, the group is focusing on agility and rigorous execution, equipping each of its maisons with a more structured and sustainable brand strategy, as well as the operational support essential to accelerate their development," the accounts note said, pointing out that "in 2026, Kering will continue its improvement path with the aim of returning to growth and improving margins", referring details to Thursday's Capital Market Day. Jp Morgan analysts reiterated their Sell rating on the stock, leaving the price target unchanged at €235. In particular, despite Kering's claim of strong demand for Gucci's products in North America, the experts believe that this is probably a trend common to all luxury brands, rather than specific to Gucci, highlighting instead double-digit declines in all other regions. Citi was on the same wavelength: "Although guidance has been confirmed, the timing for a Gucci relaunch remains uncertain and likely gradual, in a difficult macroeconomic environment and persistent geopolitical tensions," explained the brokers. Lastly, Bernstein, while confirming its Neutral rating, has revised its target price downwards from EUR 220 to EUR 235.

Also unconvincing were Hermes' accounts released this morning with the markets still closed, which saw first quarter revenues fall 1.4% to EUR 4.07 billion discounting a negative exchange rate impact (EUR -290 million). In the previous quarter, the group had reported a 9.8% year-on-year increase in revenue. At constant rates, sales would have increased by 5.6%. Geographically, sales slowed down mainly in Asia in value terms (-4.5% overall with -3.9% Japan and -4.6% Asia-Pacific) but also in France (-2.8%). In terms of products, the decline was mainly due to the accessories and ready-to-wear segment and watches.

Operations noted that the accounts were lower than expected due to the impact of the conflict with Iran on consumption, particularly in the Middle East and France, where the decline in tourist flows affected purchases of high-end goods. In detail, the region including the Middle East recorded a 5.9% drop in sales during the period, while revenues in France - an important destination for tourists - declined by 2.8%, penalised by lower tourist spending. Finance director Eric du Halgouet said Hermès shops in France, Switzerland and the UK saw fewer customers from the Middle East. Italy, also hit, has proved more resilient. Since the beginning of the year, the stock has lost about 16%. According to Citi analysts, Hermès seems to have had a rather weak start to the year. In detail, the profile of the first quarter is reminiscent of that of 2025, when a weak start in the first three months was followed by a sequential acceleration over the course of the year, the analysts write. Citi expects downward revisions to consensus estimates for revenue and ebit for this year. Nevertheless, according to the brokers, 'the company is well positioned for 2026'.