Hermes reported a deceleration in top-line momentum in the first quarter, citing geopolitical and regional demand pressures that tempered its recovery. Revenue for the three months to March stood at €4.07 billion, an organic rise of 5.6% from a year earlier. That pace was below the 7.1% consensus estimate referenced by Jefferies and represented a clear slowdown from the 9.8% organic growth recorded in the prior quarter.
Measured at reported exchange rates, sales declined year-on-year after being hit by approximately €290 million of negative currency effects. The headline result of €4.07 billion missed analyst expectations compiled in a Visible Alpha poll, where the consensus sat at €4.16 billion.
Regional performance
Hermes flagged the Middle East as a material area of impact for the quarter. Jefferies analysts led by James Grzinic estimated the conflict in the region subtracted around 150 basis points from first-quarter revenue growth. The group said wholesale activity to concession stores in the Middle East and airport channels was particularly affected. Hermes also noted that conditions in the Middle East have shown improvement so far in the second quarter.
Asia-Pacific excluding Japan was another point of weakness, delivering just 2.2% organic growth in the quarter. That outcome trailed a consensus expectation of 5.7% and marked a sharp slowdown from the 8% expansion reported in the fourth quarter. Jefferies singled out the APAC ex-Japan result as likely to draw investor scrutiny at the upcoming investor call.
By contrast, the Americas region provided a bright spot, with sales expanding 17.2% and comfortably outpacing forecasts.
Analyst commentary
Jefferies analysts framed the update as reflecting two core investor concerns. They wrote that the stock’s recent weakness was driven firstly by fears over a heavily challenged Middle East exposure - estimated at about 8% when including travel-related spend by the cluster outside the region - and secondly by worries about slowing momentum in China. The firm added: "Today’s APAC ex Japan Q1 gain of 2.2% (after 8% in Q4) will be a major point of debate at the 8am UKT call, and a clear source of concern for fundamental investors."
Outlook
Despite the near-term headwinds, Hermes reiterated its medium-term guidance for sales growth at constant exchange rates. The company said: "In a still uncertain economic and geopolitical context, the group has moved into 2026 with confidence."
The first-quarter update underscores a mix of regional divergence: strong performance in the Americas, pronounced softness in parts of Asia, and near-term disruption stemming from the Middle East. Currency movements further clouded the reported numbers.
Implications
The results and commentary will likely shape investor conversations around regional exposure, travel-related retail channels such as airport concessions, and the sensitivity of luxury demand to near-term geopolitical disruptions. Hermes' reaffirmation of medium-term targets provides a degree of assurance, though recent trends in APAC ex-Japan and the Middle East will be focal points for analysts and shareholders watching conversion of demand into revenue.