Consolidated revenue amounted to 4.1 billion dollars over the first three months of the year, representing a 6% increase at constant exchange rates, falling short of the consensus forecast of over 7% growth.

Due to a significant negative currency impact, sales even recorded a decline (-1%) at current exchange rates.

Growth Hampered by Geopolitical Context

The Parisian house - renowned for its Birkin and Kelly bags as well as its silk scarves - was unable to evade the global storm triggered by the U.S.-led offensive against Iran and the severe repercussions these tensions have caused throughout the region.

While no longer maintaining their previous breakneck pace, first-quarter results remain significantly higher than those of other industry players such as LVMH, whose Fashion & Leather Goods division saw organic sales contract by 2% in the first quarter, or Kering, whose strategic brand Gucci suffered an 8% organic decline over the period.

The group acknowledged, however, that events in the Middle East heavily impacted its wholesale business, notably through a drop in sales to third-party retailers, primarily in airports.

Since March, the conflict has more broadly affected the entire zone, including the United Arab Emirates, Kuwait, Qatar, and Bahrain. In organic terms, sales in the Middle East plunged by nearly 6% over the quarter.

China Also a Cause for Concern

With the exception of France (-2.8% at constant exchange rates), which was penalized by slowing tourist flows, sales nevertheless continued to grow in all other regions, particularly in the United States (+17.2%), Europe excluding France (+9.7%), and Japan (+9.6%).

Hermès Executive Chairman Axel Dumas emphasized that the group was pursuing its "profitable growth with conviction and confidence," stating that the fundamentals of its business model constituted, more than ever, a "differentiating asset."

However, analysts had expected the saddlemaker, which caters to ultra-wealthy clients capable of spending over 10,000 dollars on a handbag, to show greater resilience to current economic turbulence.

In a reaction note, analysts at Jefferies expressed concern over the difficulties encountered in the Middle East, which accounts for approximately 8% of sales including travel spending by Gulf customers, but pointed primarily to the slowdown observed in Chinese growth.

Sales in Asia-Pacific (excluding Japan) grew by only 2.2% at constant exchange rates in the first quarter, compared to +8% in the fourth quarter, which the U.S. broker considers a major point of debate and a potential source of concern for investors.

Toward a Downward Revision of Consensus

UBS analysts stated they expect consensus forecasts to be revised downward by up to 5% following this disappointing release, which shows that consumers are spending less on high-end fashion due to the uncertain geopolitical climate.

Others, such as TP ICAP, referred to growth that remains "solid" despite this temporary cyclical and geopolitical slowdown.

"The first quarter reflects a cyclical normalization amplified by the geopolitical shock to tourism, rather than a weakening of the model," the brokerage firm judged.

"In the short term, visibility remains constrained by exogenous factors, but the structural quality and investment capacity of the Hermès model remain fully intact," the investment bank assured.

On the Paris Stock Exchange, Hermès shares dropped 9.8% to 1,608 euros in early trading, a correction amplified by what is considered the stock's high valuation.

The stock, with a market capitalization exceeding 170.7 billion euros, is now down 24% since January 1st. It has fallen to its lowest level since January 2023 and is no longer far from seeing its market cap halved since its peak of 2,957 euros on February 14, 2025.