Hermès Q1 softens

Hermès reported slower first-quarter growth on April 15, and the Birkin maker’s shares dropped sharply in Paris trading. (wwd.com) (marketscreener.com) The company said revenue reached about 4.1 billion euros in the three months to March 31, with sales up 6 percent at constant exchange rates but down 1 percent as reported after a 290 million euro currency hit. (wwd.com) (globenewswire.com) By the close on April 15, Hermès stock was down 8.22 percent on Euronext Paris to 1,636.50 euros, after trading as low as 1,529 euros intraday. (marketscreener.com) The weak spots were tied to travel and the Middle East. Hermès said France sales fell 3 percent as tourist flows slowed in March, while Middle East sales dropped 6 percent as war hurt business in the United Arab Emirates, Kuwait, Qatar and Bahrain. (wwd.com) That matters because Hermès had entered 2026 as one of luxury’s sturdier names. In February, it posted fourth-quarter growth of 9.8 percent at constant exchange rates, ahead of analyst estimates, and shares rose as much as 3.4 percent that day. (bloomberg.com) The broader sector has also been warning that the Middle East conflict is disrupting luxury demand and travel retail. LVMH said on April 13 that first-quarter revenue fell 5.9 percent to 19.12 billion euros, citing the conflict’s impact on a region that accounts for about 6 percent of its business. (wwd.com) Hermès still showed pockets of strength. Americas sales rose 17.2 percent at constant exchange rates, and the company said sales in its own stores increased 7 percent even as wholesale and airport locations came under pressure. (wwd.com) Analysts had already started turning more cautious before the report. HSBC said in a March note that the Middle East, which had been a rare source of luxury growth, could come under short-term pressure as war disrupted trade, tourism and the movement of wealthy shoppers. (wwd.com) Hermès is not pulling back on production. On April 10, the company opened its 25th leather-goods plant in France, near Bordeaux, as it kept expanding handbag output despite the luxury slowdown and the uncertainty tied to the Iran war. (bloomberg.com) Axel Dumas, Hermès’ executive chair, said the group would keep its long-term course in what he called a tense geopolitical environment. The quarter showed that even the sector’s most insulated name is now feeling weaker tourism, foreign exchange pressure and softer demand in China and the Middle East. (wwd.com)