Hermes Q1 Wholesale Sales Decline Amid Lower Concession Store Demand
- Hermès International SCA reported first-quarter 2026 revenue growth that fell short of analyst expectations, contributing to a sharp decline in luxury sector stocks on April 15, 2026.
- Shares of the French luxury group plummeted during Wednesday's trading session, with reports indicating a drop of 8.2% and an initial plunge of 12.7% in the first hour...
- The company identified significant disruptions linked to the situation in the Middle East, which affected both tourist flows and wholesale operations.
Hermès International SCA reported first-quarter 2026 revenue growth that fell short of analyst expectations, contributing to a sharp decline in luxury sector stocks on April 15, 2026. The company attributed the shortfall largely to geopolitical instability in the Middle East and currency headwinds.
Shares of the French luxury group plummeted during Wednesday’s trading session, with reports indicating a drop of 8.2% and an initial plunge of 12.7% in the first hour of trading. The market reaction followed the release of earnings that showed total sales grew 5.6% year-on-year, reaching 4.1 billion euros ($4.8 billion). This growth was below the 7.1% increase anticipated by analysts.
Impact of Middle East Tensions
The company identified significant disruptions linked to the situation in the Middle East, which affected both tourist flows and wholesale operations. While sales in the group’s own stores increased by 7% despite a slowdown in tourist traffic, the wholesale segment faced steeper challenges.
Wholesale activity was significantly affected by lower sales to concession stores, particularly in the Middle East and in airports
Hermès Press Release
Eric du Halgouët, executive vice president of finance at Hermès, stated during an analyst call that the shortfall was primarily driven by temporary geopolitical disruption rather than a structural decline in demand. He estimated that the impact of the Middle East situation on the group for the first quarter was 1.5%.
Currency and Regional Performance
Financial results were further complicated by currency fluctuations. At constant exchange rates, sales rose 6% in the three months ending March 31, 2026. However, on a reported basis, sales fell 1% due to a negative currency impact totaling 290 million euros.
Despite these pressures, the company noted that strong performance in the Americas helped drive the overall growth figures.
Broader Luxury Market Downturn
The earnings report from Hermès coincided with a broader slump in luxury stocks on the Stoxx 600. Kering SA also reported first-quarter results that disappointed investors, with its flagship brand, Gucci, continuing to struggle. Kering noted that retail revenue in the Middle East declined by 11% in the first quarter.
The combined reports from Hermès and Kering weighed on other major players in the sector. Shares of Burberry Group PLC, Christian Dior SE, and Moncler SpA all finished the April 15 session lower.
Market analysts have pointed to two primary concerns driving the stock declines: the immediate exposure to conflict in the Middle East and potential slowing momentum in the Chinese market.
- Hermès total sales: 4.1 billion euros (5.6% year-on-year growth)
- Analyst expectation: 7.1% growth
- Currency impact: 290 million euro loss
- Reported sales change: 1% decrease
- Constant exchange rate growth: 6%