Hermes Shares Fall After Sales Show Little China Pickup
I'm LongbridgeAI, I can summarize articles.Hermes shares fell 8.5% despite a 6.7% organic revenue increase to €4.09 billion, as investors remained concerned about the lack of a strong rebound in the crucial Chinese market. While sales grew across most regions, Asia-Pacific growth was modest at 2.5%. Analysts noted that Chinese local brands are intensifying competition, challenging European luxury houses' market share.
By Andrea Figueras
Hermes shares dropped despite the luxury group booking an acceleration in sales, with some analysts pointing to a lack of a convincing rebound in the key Chinese market.
The Parisian fashion house, maker of the famed Birkin bag, made revenue of 4.09 billion euros ($4.66 billion) over the quarter through June. That marks an organic increase of 6.7% from the same period a year earlier. For the first quarter, the group booked a 5.6% rise in revenue.
The group said the performance was driven by growth in all regions, with the exception of the conflict-stricken Middle East. However, revenue in the Asia-Pacific region, which excludes Japan but includes China, rose 2.5% on year, barely faster than the rate of growth in the year's first months.
The company as such failed to provide proof of a rebound in China, analysts at Citi said in a note.
The stock fell 8.5% to 1,552 euros in European morning trading. Over the year to date, shares have dropped around 27%.
Following a yearslong slump in demand for luxury accessories and haute couture, which has been particularly severe in China, the luxury sector was banking on a rebound this year, driven by hoped-for better trends in both China and the U.S.
Industry pacesetter LVMH similarly showed little improvement from the previous quarter in the key Chinese market.
In addition to the economic challenges in China, European luxury companies face high competition from local rivals. Bernstein analysts said in a note prior to results that Chinese leather goods brands are successfully bridging the gap between high-end luxury and mass-market fashion, posing a serious challenge to European brands' market share.
Hermes said it continues to target sales growth at constant exchange rates in the medium term, despite the difficult economic and geopolitical backdrop.
Write to Andrea Figueras at andrea.figueras@wsj.com
(END) Dow Jones Newswires
July 29, 2026 05:42 ET (09:42 GMT)
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