Hermès (EU:RMS) saw its shares drop more than 12% in Paris after reporting slower sales growth in the first quarter, with geopolitical tensions linked to the Iran conflict weighing on sentiment across the luxury sector.
The sell-off erased over $20 billion from the group’s market value.
Revenue reached €4.07 billion for the three months to March, representing organic growth of 5.6% year-on-year. This was below the 7.1% consensus forecast referenced by Jefferies and marked a notable slowdown from the 9.8% growth achieved in the previous quarter.
On a reported basis, sales declined compared with last year due to €290 million in adverse currency movements. The reported revenue figure also missed analyst expectations of €4.16 billion, based on a Visible Alpha survey.
Jefferies analysts, led by James Grzinic, estimated that tensions in the Middle East reduced first-quarter revenue growth by around 150 basis points. Wholesale activity—particularly in concession stores and airport locations in the region—was most affected, although the company noted that trends in the Middle East have begun to improve in the second quarter.
Asia-Pacific excluding Japan also underperformed, with growth of just 2.2%, well below the 5.7% consensus and sharply down from 8% growth in the fourth quarter. According to analysts, this slowdown is likely to be a key concern for investors.
“The stock’s poor performance in the run-up to today’s update reflected two fears. Firstly, that of a heavily challenged ME exposure (at c.8% inc travel spend by the cluster outside the region),” they wrote. “Secondly, and more relevant for the broader valuation debate, are concerns around a slowing Chinese momentum.”
“Today’s APAC ex Japan Q1 gain of 2.2% (after 8% in Q4) will be a major point of debate at the 8am UKT call, and a clear source of concern for fundamental investors,” the analysts added.
In contrast, the Americas delivered strong performance, with revenue increasing 17.2%, comfortably ahead of expectations.
Hermès reiterated its medium-term outlook, maintaining its guidance for sales growth at constant exchange rates. “In a still uncertain economic and geopolitical context, the group has moved into 2026 with confidence,” the company said.
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