Hermès sales slip

Hermès reported a weaker first quarter on Wednesday, and its shares fell about 14% at the open. (reuters.com) Sales rose 5.6% at constant exchange rates, below a 7.1% Visible Alpha analyst forecast, while reported revenue slipped 1% to 4.07 billion euros from 4.13 billion euros a year earlier. (reuters.com; cnbc.com) Hermès said the March slowdown was abrupt after stronger January and February trading, and finance chief Eric du Halgouet said sales in Dubai and other Gulf luxury malls dropped 40% in March. (reuters.com; rte.ie) The hit spread beyond the Gulf. Hermès said weaker tourist traffic hurt concession stores in airports and sales in France, Britain, Italy and Switzerland, where Gulf shoppers are an important customer base. (reuters.com; rte.ie) That matters because Hermès had been the luxury sector’s standout holdout in a broader slowdown. Reuters reported the stock hit its lowest level in more than three years, and losses since January 1 reached 28%. (reuters.com) The Middle East is still a small part of the business at 4.4% of sales, but it was Hermès’ fastest-growing region last year, making the reversal harder for investors to dismiss as a one-off. (reuters.com; rte.ie) Currency also made the quarter look worse. Hermès said exchange-rate moves cut 290 million euros from revenue, even as store sales still increased 7% despite weaker tourist flows. (reuters.com; cnbc.com) Regional performance was uneven. France sales fell 2.8%, Asia growth slowed to 3.5% as air-travel disruption hit Singapore and Thailand, while United States sales rose 17.2% at constant exchange rates. (reuters.com) The selloff also landed in a sector already under pressure. Kering said Middle East retail revenue fell 11% in the quarter, and luxury shares including LVMH, Burberry, Christian Dior and Moncler also traded lower on Wednesday. (cnbc.com) A year ago, Hermès had overtaken LVMH in market value as investors rewarded its tighter supply and wealthier customer base. Wednesday’s update showed that even the maker of Birkin and Kelly bags is not insulated when war disrupts travel, shopping hubs and confidence at the same time. (rte.ie; reuters.com)