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China Weakness · Geopolitical Risk · Hermes Earnings · Luxury Sector
French luxury group Hermes reported a significant slowdown in first-quarter organic sales growth to 5.6%, missing the 7.1% consensus estimate, which caused its shares to tumble over 12% and wiped more than $20 billion from its market value.
Hermes posted €4.07 billion in revenue for the three months to March, falling short of analyst expectations of €4.16 billion, according to a Visible Alpha poll. This 5.6% organic growth sharply decelerated from the 9.8% recorded in the prior quarter.
Jefferies analysts, led by James Grzinic, attributed approximately 150 basis points of the revenue growth shortfall to the Middle East conflict, particularly impacting wholesale sales. Asia-Pacific (APAC) excluding Japan also showed weakness, growing only 2.2% against an 8% growth in the fourth quarter, a significant concern for investors.
The Americas region, however, was a bright spot, expanding 17.2%. Despite the challenges, Hermes reaffirmed its medium-term guidance for sales growth at constant exchange rates, expressing confidence for 2026.
Hermes Shares Plunge 12% on Q1 Sales Miss(current)
