Hermes and Gucci sales fall short on Middle East turmoil. Investors were surprised.
By Steve Goldstein
Hermes and Gucci each saw sales impacted by Middle Eastern turmoil.
Hermes International shares, trading at 34 times earnings, got pummeled on Wednesday after the luxury-goods maker reported slower-than-expected first-quarter sales growth.
Hermes reported 5.6% sales growth in the first quarter, below analyst expectations of sales growth closer to 7%.
The Birkin bag maker's "other" region that is mostly the Middle East saw sales tumble by 6%, and the group's French sales fell by 3% as tourist flows - again from the Middle East - dried up. Hermes says half of French sales come from tourists.
Hermes said the Middle Eastern sales drop was notably in the United Arab Emirates, as well as in Kuwait, Qatar and Bahrain.
Hermes shares (FR:RMS) tumbled 10% in Paris trade.
Also moving lower was Gucci owner Kering, which said sales were flat on a comparable basis. Kering's Gucci brand also was impacted by the Middle East, as comparable sales fell 8%.
Kering shares (FR:KER) also fell 10%.
-Steve Goldstein
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04-15-26 0451ET
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