Hermès Faces Slower Growth in 2026 Q1

Image courtesy: Hermès

Even luxury darling Hermès is not immune to the negative impact of the current Middle East conflict. Its 2026 Q1 financial results show revenue and sales growth, but lower than expected, due to disruption from and in the Middle East, also impacting tourist travel and shopping elsewhere. Yet, it is doing better than other luxury players like LVMH and Kering as it reports this more measured start to 2026.

Described by Hermès as “robust sales growth in a complex geopolitical context,” in 2026 Q1, revenues rose 6% over the same period in 2025 (at constant exchange rates). Factoring in a significant currency impact, sales declined one percent. The overall revenue for the quarter was €4.1 billion.

Axel Dumas, Executive Chairman of Hermès, stated:

“In a tense geopolitical environment, Hermès maintains its course, true to its long-term strategy. Supported by its abundant creativity, its uncompromising quality and the loyalty of its clients, Hermès is continuing its profitable growth in 2026 with confidence and conviction. The fundamentals of the Hermès model are more than ever a differentiating strength.”

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Digging deeper, Hermès’ performance reveals a familiar theme: strong underlying demand, tempered by external factors.

The Americas led growth with an exceptional 17% increase, showing balanced growth across all métiers in the United States, Canada, and South America.

Europe (excluding France) followed closely with 10% growth, supported largely by domestic demand. France, however, slipped 3%, impacted by reduced tourist traffic, particularly in March — tied to geopolitical tensions in the Middle East.

Japan also posted record growth (+10%), driven by strong local engagement and store activity.

Asia excluding Japan grew a modest 2%, with Greater China continuing its slow but steady recovery. In contrast, the “Other” region, largely tied to the Middle East — fell 6%, reflecting a sharp drop in tourist-traffic due to the ongoing tension.

Despite these headwinds, Hermès noted that in-store sales still rose 7%. However, wholesale told a different story, hit harder by weaker performance in airport retail and concession spaces, particularly across Middle Eastern hubs.

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Across the Hermès métiers, performance followed a similar pattern, with leather and core categories leading growth, while watches once again lagged behind.

Leather Goods and Saddlery, Hermès’ largest group, led the way, posting 9% growth. Demand remains firmly anchored in the house’s iconic bags, but it’s newness that’s keeping momentum fresh. Designs like the Faubourg Express and Collier d’Attelage have already gained traction, while the introduction of the Herbag 20 taps neatly into the ongoing appetite for smaller formats.

To keep pace, Hermès continues to scale production, opening its 25th leather workshop in Loupes (Gironde). Further sites are already planned in Charleville-Mézières (2027), Colombelles (2028), and Les Andelys (2030), reinforcing its long-term investment in French craftsmanship.

Ready-to-wear and Accessories remained stable this quarter, with recent runway presentations, including the women’s Fall-Winter 2026 show in Paris and Véronique Nichanian’s latest and last.mes nswear collection, well received. Silk and Textiles recorded solid growth (+8%), driven by consistently renewed designs and seasonal pieces.

Also reporting 7% revenue growth is Hermès “Other” sectors, which include Jewellery and the Home Universe. Perfume and Beauty recorded stable sales.

Watches, however, declined 4%, reflecting ongoing challenges in the segment. That said, the house continues to invest heavily here, expanding both its technical offering and production capacity — a clear indication that this is a long game.

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During the Q&A session, Hermès Chief Financial Officer Eric du Halgouët, and Head of Investor Relations Alexandra Boucheron were asked whether rising competition — particularly amid the Matthieu Blazy “frenzy” at Chanel and Jonathan Anderson’s arrival at Dior —might prompt a shift in Hermès’ growth strategy. The question also touched on markets like China, where novelty often plays a key role in driving footfall.

In response, Hermès was clear that the fundamentals of its model remain unchanged: even in a more complex competitive environment, there will be no adjustment to its strategy or way of operating. The house also emphasised that creation and “freedom to buy” remain central to its philosophy, pointing to the strong performance of its latest collections, alongside consistently high sell-through rates.

Halgouët also highlighted that recent growth dynamics have been driven more by external factors than underlying demand, notably the impact of Middle East disruption and a broader shift in tourism flows. Reduced visitors from the Middle East and Greater China were partly offset by stronger US and European tourism. Despite this, local client demand across regions such as Europe remains solid, with double-digit growth still visible in domestic markets.

Looking ahead, Hermès reiterated confidence in its full-year trajectory, noting that leather goods growth remains on track despite a non-linear quarterly pattern linked to its artisanal production model, and that store expansion is expected to contribute to overall growth.