Hermès reported a 6% revenue increase in the first quarter of 2026, driven entirely by higher prices amid flat volume growth. The Middle East conflict led to a 6% sales drop in that region and a double-digit decline in its US-traded shares. Analysts view the sell-off as overdone, presenting a buying opportunity for long-term investors.
Hermès experienced a sharp slowdown in Q1 2026 sales growth due to the ongoing Iran war in the Middle East. While overall revenue grew 6% year-over-year, the increase stemmed solely from price hikes, with volume growth remaining flat. Sales in the Middle East fell 6%, contributing to broader market concerns for luxury stocks, which had anticipated a recovery in 2026 after a demand pullback since early 2024. Profitability, however, stayed intact despite these pressures. The company's shares, traded over-the-counter as HESAY, dropped double-digits following the results, compressing the price-to-earnings ratio from 51–52x to 38.3x, according to a Seeking Alpha analysis published Sunday. This reaction is described as overblown by some observers, given Hermès' historical resilience and premium business model. The analyst, who holds a long position in HESAY, highlights robust long-term return potential of 10–12%, calling it a golden entry point for patient investors.