Shares in Hermes sank sharply this morning after reporting a drop in sales due to the war in the Middle East, as fewer tourists visited popular shopping destinations.
The Birkin Bag maker is the latest luxury group to take a hit from the war, as wealthy tourists held off on spending in the conflict-hit region and across Europe.
Sales rose 5.6 per cent at the French giant in the first three months of the year, missing analyst expectations of a 7.5 per cent increase.
And sales in the Middle East region were down 6 per cent, as footfall to shopping hubs in the region has plunged after the outbreak of the war.
Hermes said this had particularly impacted the United Arab Emirates, as well as in Kuwait, Qatar and Bahrain.
Shares in Hermes fell 12.9 per cent this morning.
Hermes’ bags – which are a favourite of celebrities such as Maura Higgins – have helped drive sales
France, a major destination for tourist shopping, also felt the impact as sales declined 2.8 per cent as wealthy spenders stayed away.
Shops in Italy, Switzerland and the UK have also seen fewer Middle Eastern shoppers, according to chief financial officer Eric du Halgouet.
It follows an update from LVMH this week, which set out a gloomy picture for the long- awaited revival in the luxury market. The group, whose brands include Moet, Givenchy and Louis Vuitton, said the conflict shaved around 1 per cent off sales growth in the first quarter of the year.
Emma Wall, chief investment strategist at Hargreaves Lansdown, said: ‘Luxury good companies LVMH and Hermes have announced results this week, revealing the stark impact of the Iran war on sales. Share prices for the sector have fallen on the news.
‘At a starting price of £12,000 a pop, Hermes Birkin handbags may not be considered essential expenditure for the vast majority of the global population, but luxury goods sales are often a leading indicator of economic growth and so market watchers are paying attention.’
Hermes said its bags had helped drive sales despite a downturn in the luxury market since the post-pandemic splurge cooled off. Sales in this division were up 9 per cent in the first quarter.
Executive chairman Axel Dumas said: ‘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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