Paris (France) (AFP) – Shares in the French fashion groups Kering and Hermes plunged Wednesday after both reported sales that missed analyst expectations, in part due to the Middle East war, which has hit business in a key region. At around 10:00 am, Kering stock was off 10.1 percent at 251.80 euros on the Paris stock exchange, while Hermes fell 10.5 percent to 1,601.00 euros.
Kering’s first-quarter revenues were down three percent at comparable currency rates, dragged down again by its flagship Gucci brand, where sales dropped eight percent. While that was an improvement from the 10 percent slide seen in the last quarter of 2025, analysts had pencilled in a decline of just six to seven percent. The performance puts more pressure on Kering’s new chief Luca de Meo, installed last year with the mandate of reviving Gucci under its Georgian creative director Demna. De Meo is hosting a widely anticipated strategic presentation in Florence, Italy, on Thursday dubbed the “ReconKering.”
“While the group’s trajectory is clearly moving in the right direction under the new CEO, the recovery at Gucci is not yet showing up in the figures, and the timing remains uncertain,” Jean Danjou, an analyst at Oddo BHF, said in a research note. Kering also warned that Middle East revenues had been hit by the war unleashed in late February by US-Israeli strikes on Iran, with retail revenue falling 11 percent in the first quarter despite growth in the first two months of the year.
Weaker Mideast sales — and the loss of high-spending tourists from the region to Europe due to travel disruptions — hit Hermes as well. Its sales were down 1.4 percent at 4.1 billion euros ($4.8 billion), reflecting what it called a “significant” currency hit of 290 million euros as the strong euro made its coveted handbags and other items more expensive. Excluding the currency impact, revenues were up 5.6 percent in the quarter, below market expectations. Growth for leather goods — Hermes’s biggest profit generator by far — was 9.4 percent at constant rates, whereas analysts at Bernstein had expected more than 10 percent, while ready-to-wear sales edged up just 0.4 percent, well below Bernstein’s estimate of closer to five percent.
The Mideast war cost Hermes “nearly 1.5 percentage points of growth,” chief financial officer Eric du Halgouet told journalists on a conference call. “We have very good growth in the double digits in January and February, but everything stopped in March because our business was down 40 percent,” he said, adding that sales in Britain, Italy, and Switzerland had also suffered from lost Middle Eastern clients. Thomas Chauvet, an analyst at Citi, noted that “Most business segments posted results below expectations.” “However, Hermes continues to outperform its rivals in the luxury sector,” he said.
© 2024 AFP
