Trump says Iran war "close to over" amid hopes for more negotiations
Investing.com -- Hermes reported a slowdown in sales growth for the first quarter as the Iran war cast a shadow over the luxury sector’s recovery, sending its shares tumbling more than 12% in Paris trading.
The decline wiped more than $20 billion from Hermes’s market value.
The French luxury fashion group posted revenue of €4.07 billion in the three months to March, up 5.6% on an organic basis from a year earlier. This fell short of the 7.1% consensus estimate cited by Jefferies and marked a sharp deceleration from the 9.8% growth recorded in the prior quarter.
At reported exchange rates, sales fell year-on-year, weighed down by €290 million in negative currency effects. The overall result of €4.07 billion came in below analyst expectations of €4.16 billion, according to a Visible Alpha poll.
Jefferies analysts led by James Grzinic said the Middle East conflict shaved around 150 basis points off first-quarter revenue growth. Wholesale sales to concession stores in the region and at airports were particularly affected, Hermes said. Trends in the Middle East have shown improvement so far in the second quarter.
Asia-Pacific (APAC) excluding Japan was another soft spot, growing just 2.2% against a consensus expectation of 5.7% and a sharp step-down from 8% growth in the fourth quarter. The deceleration in the region is likely to draw investor attention, Jefferies analysts said.
"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.
The Americas was a bright spot, expanding 17.2% and comfortably ahead of forecasts.
Hermes reaffirmed its medium-term 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.