Hermès hit in first quarter by Middle East war and exchange rates

French luxury group Hermès reported on Wednesday that its first-quarter sales fell by 1.4 percent year-over-year to 4.1 billion euros (4.83 billion dollars). The results were impacted by exchange rates and the war in the Middle East.

At constant exchange rates, the saddler and leather goods maker's revenue grew by 6 percent, with the adverse currency effect accounting for 290 million euros. “In a tense geopolitical context, the house of Hermès is staying the course,” said executive chairman Axel Dumas, quoted in the press release. Activity in the group's stores, which grew by 7 percent, “lost almost 1.5 percentage points of growth due to events in the Middle East,” chief financial officer Éric du Halgouët told journalists.

“We had very strong double-digit growth in January and February. March came to a halt, with our business down by 40 percent,” he detailed, “mainly in the United Arab Emirates.” He added that the group operates six stores in the region, which account for “4 percent of the group's sales”.

Sales in the UK, Italy and Switzerland also suffered from the war. According to the chief financial officer, this is because Hermès has a “significant proportion of Middle Eastern clientele” in those countries.

Sales in France, down 2.8 percent to 347 million euros, were penalised by “the slowdown in tourist flows, particularly in March,” according to the press release.

In other regions, sales in America, Japan and Europe excluding France “showed strong growth,” “despite the slowdown in tourist flows linked to events in the Middle East.”

The Americas region “had an exceptional first quarter, with balanced growth across all business lines in the US, Canada and South America.” Revenue was up 6.4 percent to 739 million euros.

Revenue in Japan was down 3.9 percent (but up 9.6 percent at constant exchange rates) to 404 million euros, driven by local clientele.

In Europe excluding France, revenue was up 7.6 percent to 538 million euros, also supported by local demand. Revenue in Asia excluding Japan fell by 4.6 percent (but increased by 2.2 percent excluding currency effects) to 1.88 billion euros. Greater China (which includes Hong Kong, Taiwan, Macau and China) “continued to see slight growth.”

This article was translated to English using an AI tool.

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