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Hermès Tumbles as Middle East War Hits First-Quarter Sales

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Hermès International's (RMS.PA) first-quarter sales fell short of expectations, weighed down by a 290 million-euro hit from currency fluctuations and weaker tourist flows amid the ongoing war in the Middle East.

Shares dropped over 9% in Paris as of midday Wednesday.

The French luxury goods group's total revenue for the three months ended March 31 declined 1.4% year over year on a reported basis to 4.07 billion euros, below the Visible Alpha consensus of 4.16 billion euros. At constant exchange rates, total revenue was up 5.6%, the company said in a same-day earnings release.

By geographical area, sales at constant exchange rates in Europe, excluding France, gained 9.7%, while the Americas region and the Asia-Pacific region, excluding Japan, saw a 17.2% and 2.2% growth, respectively. Japan booked a 9.6% increase in sales, while the Middle East and France logged declines of 5.9% and 2.8% amid a slowdown in tourist flows as a result of the war.

Hermès also saw growth in sales across its sectors, at constant currency, with the exception of the Watches segment, which posted a 3.7% fall, while the Perfume and Beauty and the Ready-to-wear and Accessories segments recorded stable sales.

"Hermes has delivered 1Q26 revenues of EUR4.1bn (+5.6% organic) which are 2% below consensus (+7.1%) however in line with RBC estimates (+5.9%). Stronger than expected Americas and Europe ex-France is offset by weaker France (lower tourist flows) and APAC," analysts at RBC Capital Markets said in a quick take note. "These results are likely to be met with some disappointment despite moderating expectations and relatively soft share price performance coming into the print."

Looking ahead, Hermès confirmed its goal of achieving revenue growth at constant exchange rates over the medium term, despite global economic, geopolitical and monetary uncertainties.

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