Hermes reports weaker first-quarter sales as conflict hits Middle East region (updated)
15/04/2026 07:24
Updates to add graphic
Weaker tourist flows affect Europe and Asia, Hermes finance chief says
Hermes' Middle East sales down 6% as war hits shopping hubs
The Middle East was Hermes' fastest-growing region in 2025
Hermes shares fall as much as 14%, Kering down 9%
By Helen Reid
April 15 (Reuters) - French group Hermes HRMS.PA led a slump in luxury shares on Wednesday after weak sales showed the war in Iran was weighing on demand in the Middle East and tourism in Europe, dealing a blow to hopes of a revival for the sector.
Shares in the Birkin bag maker sank as much as 14% in early trade, with sales in the Middle East falling and fewer tourists buying designer items in Paris and London. The widespread impact of the conflict has been felt from Dubai mall sales to soaring energy prices hitting consumer confidence.
Shares in Gucci owner Kering PRTP.PA
fell
more than 9% on Wednesday after reporting the war had
hurt spending
, chiming with Louis Vuitton owner LVMH LVMH.PA which said on Monday it had suffered a
sharp slowdown
in the region.
Hermes, which carefully controls production and sales to maintain exclusivity, had been the most resilient luxury group in a years-long industry-wide slowdown, but even it was not immune to the conflict's impact. Its shares dropped as much as 14% to their lowest since January 2023 before recovering slightly to be down 9% at 0850 GMT, bringing losses so far this year to 24%.
Luxury stocks have been increasingly volatile as
hedge funds
have ramped up bets in the sector.
'ABRUPT HALT' TO MIDEAST SALES GROWTH IN MARCH
First-quarter sales of products including handbags, silk scarves and perfume rose by 5.6% in currency-adjusted terms, Hermes said, lower than a Visible Alpha analyst consensus of 7.1% growth.
Deutsche Bank analysts said the result suggested "zero underlying volume growth" - no increase in the number of items sold - given Hermes raised prices by 6% at the start of the year.
The overall impact of the conflict, denting shoppers' appetite from Dubai to Paris, took 1.5 percentage points off Hermes' quarterly sales growth, finance chief Eric du Halgouet said.
In the Middle East region, sales fell 6% in currency-adjusted terms to 160 million euros ($188.59 million), from 185 million euros in the first quarter last year.
"We had very good growth, double-digit growth in January and February and then the month of March was an abrupt halt," said du Halgouet, adding that sales in luxury malls in Dubai and other Gulf shopping hubs dropped by 40% in March.
Though only accounting for 4.4% of sales, the Middle East was the fastest-growing region for Hermes last year.
But Du Halgouet said the impact on profitability from the Middle East slowdown was "not significant" for the moment.
"It will depend on whether this lasts another month or two... if it's a two-month affair I think we can still absorb this impact without too much trouble," he said.
The strength of the euro has also become a major headache for luxury firms. It took 290 million euros ($342 million) off Hermes' revenue in the quarter, leading to a 1% drop in reported sales to 4.07 billion euros, from 4.13 billion euros a year ago.
WEAKER TOURISM HITS AIRPORT SALES AND EUROPEAN LUXURY HUBS
Hermes, which caters to the ultra-wealthy with handbags over $10,000, said a drop in tourist numbers had hit sales in concession stores at airports and in the Middle East, as well as in France, Britain, Italy and Switzerland, where Gulf shoppers are a key driver.
In France, where more than 50% of Hermes sales are to tourists according to Du Halgouet, revenue declined 2.8%. In Asia, the biggest region by sales for Hermes, revenue grew by just 3.5% in currency-adjusted terms as air travel disruption also impacted stores there, particularly in Singapore and Thailand.
The U.S. was a bright spot, with currency-adjusted sales up 17.2%.
($1 = 0.8484 euros)
Hermes shares sink to lowest since January 2023 https://www.reuters.com/graphics/HERMES-RESULTS/dwpkylaaxpm/chart.png
European Luxury https://www.reuters.com/graphics/LUXURY-EUROPE/zgvoyxkenvd/chart.png
(Reporting by Helen Reid. Editing by Mark Potter and Elaine Hardcastle)
((helen.reid@thomsonreuters.com))