Hermès is taking a hit this morning on the Paris Bourse. Shares tumbled over 12% at the opening after the group announced sales down 1.4% in the first quarter. Two sworn enemies explain this disappointing result: the war in the Middle East and the strength of the euro.
🔍 What's going on?
In the first quarter, Hermès achieved 4.1 billion euros in sales. On paper, that's a decline. But take a closer look: adjusted for currency effects, sales were up 6%. The problem is that the euro strengthened against the yen, dollar, yuan and won, nibbling 290 million euros off sales.
.On the geopolitical front, the picture is clear. The Middle East, which accounts for 4% of the group's sales, saw its activity collapse by 40% in March, especially in the United Arab Emirates. In January-February, Hermès posted double-digit growth there. March came to an abrupt halt.
.💡 Why does it matter?
For a trader who follows the luxury sector, this disappointment on Hermès weighs on the entire CAC 40 (index down 0.55% this morning). Especially as rivals are faring no better: LVMH and Kering both posted sales down 6% in Q1. Hermès is still ahead of the competition, but that's scant consolation.
The disruption in the Middle East is just outstripping local stores. Hermès also sells to Middle Eastern customers in the UK, Switzerland and France. As a result, sales in France fell by 2.8%. Disrupted flights via Dubai are also complicating deliveries.
📊 Our opinion
We remain vigilant but not panicked. Hermès is reassuring us that it will be able to absorb the shock if the situation is limited to two months. But let's wait before pouncing on it. The geopolitics of the Middle East remain unstable, and the strong euro is not about to reverse itself quickly. The stock deserves a short-term technical rebound after this 12% plunge, but we're favoring a wait-and-see approach until there's more clarity on how long the tensions will last.
.✅ To remember
- Hermès Q1: down 1.4% in euros, up 6% excluding exchange rates.
- 290 million euros lost due to euro strength.
- Middle East: down 40% in March, the group's main drag.
- Hermès outperforms LVMH and Kering, but all three decline.
- France down 2.8%: Middle Eastern customers hit everywhere.
What do you think?Do you see this fall as a buying opportunity for Hermès, or would you prefer to wait for a more positive signal before making a move?
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