Iran War Claims New Victims: Hermes Sales Decline - Shares Plunge
Shares in global luxury goods companies weakened across the board following dismal first-quarter 2026 performance amid the Middle East conflict that is beginning to pressure sales.
Hermes shares fell 8.2% at one point, while Kering dropped 9.3%. The pressure also spread to broader sectors, with Burberry, Christian Dior, and Moncler closing in the red.
Hermes reported sales of €4.1 billion in the first quarter of 2026, up 5.6% year-on-year. However, this figure was below analysts’ expectations of 7.1% growth.
The company cited a slowdown in tourist flows due to the Middle East situation as a key factor pressuring performance, particularly in airport stores and concession outlets. Jefferies analyst James Grzinic noted that the decline in Hermes shares reflects two market concerns: significant exposure to the Middle East and slowing demand from China.
Meanwhile, Kering also recorded underwhelming results. First-quarter revenue stood at €3.57 billion, down 6% year-on-year.
This decline was largely driven by weakening performance at Gucci, where sales fell 8% organically, deeper than analysts’ forecasts. Kering, which also owns Yves Saint Laurent, Bottega Veneta, and Balenciaga, recorded an 11% drop in Middle East retail sales in the first quarter.
The region has traditionally been a bright spot amid the global luxury goods industry’s slump. Overall, the Middle East accounts for about 5% of the company’s retail revenue.
Kering CEO Luca de Meo emphasised that Gucci’s recovery remains the top priority. He stated that a major transformation is underway, from customer strategy to product distribution.
However, Bernstein analyst Luca Solca described these results as a reality check, indicating that business recovery is not as straightforward as market expectations. The pressure on the luxury goods sector is also inseparable from geopolitical conflicts.
Tensions have escalated since attacks between the United States, Israel, and Iran at the end of February, which also triggered a global energy crisis and disruptions in the Strait of Hormuz. This situation has made global markets volatile and eroded investor confidence, particularly among those who previously hoped for a recovery in luxury goods demand this year.
Industry giant LVMH revealed that the Middle East conflict has eroded organic growth by around 1% in the first quarter. LVMH Chief Financial Officer Cécile Cabanis said demand dropped sharply by 30% to 70% in several shopping centres since the conflict intensified.
Nevertheless, analysts note positive signals from other markets. Demand from the United States and China is starting to show improvement, though not yet strong enough to counter global pressures.