Updated 4:25 p.m. ET April 15
PARIS — Shares in Hermès International fell 8.2 percent on Wednesday after the French luxury group posted first-quarter revenue growth slightly below expectations, demonstrating that while the Birkin-maker is still leading the luxury pack, it is not enough to outrun currency headwinds, geopolitical disruption in the Middle East and weakening tourist flows in Europe.
The stock lost 146.50 euros to close the trading day in Paris at 1,636.50 euros.
Sales at the French luxury house rose 6 percent at constant exchange rates in the three months to March 31, but fell 1 percent on a reported basis after a negative currency impact of 290 million euros.
According to Hermès, the shortfall was driven largely by temporary geopolitical disruption rather than structural weakness in demand, said executive vice president of finance Eric du Halgouët on a call with analysts following the release. “We estimate that the impact for the group will be 1.5 percent for [the first quarter],” he said, speaking of the Middle East.
But analysts weren’t convinced. Sales still grew, but mainly through a price increase of 6 percent earlier in the year and the company’s reliance on leather goods, indicated Deutsche Bank analyst Adam Cochrane in a note following the call.
“The fears over the Hermès business model of the attractiveness of the non-leather categories will likely resurface again,” he wrote. “The bar is higher for the highest-quality company — that had already seen numbers moving backward — and accordingly the sales miss is disappointing.”
The slight miss “reinforces our sense that Hermès is experiencing fading brand momentum,” added Bernstein analyst Luca Solca, though he offered a glimmer of hope. The quarter was “impacted by some degree of phasing on inventories, wholesale disruption to travel retail and concessionaires in the Middle East, and lower tourists flows to Europe: all of which could well reverse over the rest of FY26.”
Speaking about the current situation, du Halgouët added that the sales downturn was concentrated after the war erupted in March, dampening a strong start to the year.
“It’s only in March that the revenue started to go down in the Middle East,” he said, noting that store closures and reduced operating hours in parts of the United Arab Emirates, Qatar, Bahrain and Kuwait had affected results. At the height of the disruption, he said, “our revenue dropped by 20 to 30 percent depending on the day and on the stores that we operate directly.”
Overall, sales in the Middle East were down 5.9 percent in the first quarter.
The brand has six stores in the region, directly operated in Abu Dhabi and Dubai, and three through concessions in Bahrain, Kuwait and Qatar. The region makes up 4.3 percent of the total revenue of the group, du Halgouet said.
The Hermès store in Qatar.
Xavier Ansart/Courtesy of Hermès
Du Halgouët added that the situation has begun to stabilize, with all stores reopening in early April.
“We can see that there is a slight improvement,” du Halgouet said. “At this point, the impact of the slowdown because of the Middle East is not significant on profitability. It remains to be seen whether the events continue for a month or two, but if it’s just two months, I think that we can absorb this impact without too many difficulties.”
He added that the geopolitical situation also directly impacted 40 of its 60 travel retail locations in airports in the quarter, as well as tourism overall, with it being a key factor behind weaker performance in Europe, particularly in Paris.
The company said more than half of sales in its French stores are driven by international tourists, many from the Middle East as well as China, leaving Paris especially exposed. Sales in France were down 2.8 percent at constant currency.
Outside of Paris regional stores are performing “really well,” on the strength of loyal clientele.
Across Europe more broadly, the company said local demand remained robust even as tourist flows softened. In Italy, the U.K. and Switzerland, declines in Middle Eastern visitors were partly offset by stronger U.S. tourist demand, which has boosted the region’s resilience. In Europe outside of France, sales were up 9.7 percent.
The U.S. remained the standout performer in the quarter, with revenue across the Americas up 17.2 percent, supported by broad-based growth across product categories and sustained domestic luxury demand. Du Halgouët said the U.S. remains as a key structural growth engine for the group, helping to offset volatility elsewhere.
In Asia outside of Japan, sales were up 2.2 percent, with du Halgouët describing footfall in Greater China as “flatlining” after several years of post-pandemic boom. While momentum varied across the region, he noted that South Korea and India are strong growth markets, while Singapore and parts of Southeast Asia are more subdued but steady.
The brand opened a new store opened in Hanoi, Vietnam, in January. Overall, Japan buoyed the region, with sales up 9.6 percent.
Hermès fall 2026
DominiqueMaitre/WWD
By product category, leather goods remained the primary growth driver, rising 9.4 percent in the quarter, supported by strong demand for new models and sustained sell-through rates.
Du Halgouët emphasized that the company is continuing to increase production capacity, with a new location opened last month in France, and three more in the pipeline through 2030. It also continues to test new models.
“Some disappear after a couple of years, while others emerge later on down the road,” he said. “We want to create other bags, not just the Kelly and the Constance.”
The ready-to-wear and accessories were flat at constant currency, as the house awaits the January 2027 debut of new menswear creative director Grace Wales Bonner. Still, du Halgouët emphasized the spring 2026 collections have had strong sell-through so far.
When asked about the dynamism of competitors’ new creative direction, particularly Chanel and Dior, du Halgouët said the group would not alter its strategic direction in response to short-term volatility. “We are not going to change the model of the group,” he said.
Backstage at Hermes spring 2026 ready-to-wear show at Paris Fashion Week.
Delphine Achard/WWD
Footwear, however, remained a bright spot, supported by strong demand for sneakers and sandals, especially in the Middle East before the March slowdown.
Other categories delivered a mixed bag.
Silk and textiles grew 7.8 percent at constant currency, while perfume and beauty were flat, despite the launch of two new fragrances and a new 27-shade foundation range as the brand enters the skin care-based makeup category.
But timepieces couldn’t keep up. The watch division was down 3.7 percent at constant currency, despite new product introductions and continued growth in manufacturing capacity in Switzerland.
Jewelry and homewares rose 6.8 percent, supported by high-profile events, including a jewelry showcase held in Tokyo and new porcelain launches in Paris.
Looking ahead, the company continues to investment in physical retail and selective expansion with about 20 store projects in the pipeline, including new openings in the U.S. in Chicago, Brooklyn and Manhasset, N.Y., and a new store in Nagoya, Japan, expected in the second quarter.
In Europe, a major relocation on London’s Bond Street is scheduled for mid-June, while a new store in Geneva is planned for the fourth quarter. Alexandra Boucheron, head of investor relations, said new stores and renovations are expected to contribute just over 1 percentage point to annual growth, though timing effects may vary depending on project phasing.
Despite near-term volatility, executives maintained a confident tone on the outlook, pointing to resilient demand and disciplined expansion. “Our fundamentals remain strong, with great teams out there and loyal clients,” du Halgouet said, adding that the group remains confident in its longer-term trajectory even as it navigates geopolitical and macroeconomic uncertainty.
