Hermès reported disappointing first-quarter results with revenue growth of just 6%, falling short of Visible Alpha forecasts calling for 8.3% expansion. Sales declined 1% to €4 billion, reflecting how geopolitical tensions in the Middle East are impacting even the most resilient luxury brands. The slowdown marks a rare stumble for the house known for its Birkin bags and Kelly handbags, which typically outperform peers during market turbulence.

Typically sheltered from economic downturns thanks to an ultra-wealthy clientele and minimal tourist dependency, Hermès has maintained premium pricing by deliberately restricting supply of its iconic products. However, recent geopolitical concerns have compressed this premium, particularly affecting aspirational shoppers who purchase lower-priced items like silk scarves and beauty products from the French luxury group that relies less on tourist traffic than competitors.

The sales weakness extends beyond Hermès, with industry leader LVMH also reporting a 1 percentage point sales decline due to the US-Israel conflict with Iran. Hermès shares have plunged 16% since January, reducing its market value to €187.3bn, though performance remains in line with the broader Stoxx Luxury 10 index, suggesting widespread sector challenges that may continue as geopolitical tensions persist.