Hermès, the ‘ultimate luxury brand,’ tumbles as share price plunges 13%

[The Financial News]


Even Hermès, known as the “ultimate luxury brand,” has not been spared the impact of the 2026 Iran War.
As the Middle East is engulfed in war, the global economy is reeling and consumers are closing their wallets. Hermès has also slipped into weak performance under these conditions.
The Financial Times (FT) reported on the 15th (local time) that Hermès shares plunged as much as 13% during the day. The drop was driven by disappointing quarterly results.
First-quarter revenue at Hermès, famous for its Birkin bag, came to 4.07 billion euros (about 7 trillion won), down 1% from a year earlier. Stripping out currency effects, sales were up 5.6%, but this still fell well short of analysts’ expectations for 7.1% growth.
Hermès explained that a “decline in tourist numbers stemming from the situation in the Middle East” was behind the weak results. The company also stated that sales in the Persian Gulf region had been “severely hit by recent geopolitical developments (the 2026 Iran War).”
The 2026 Iran War, which has spread across the Middle East, is dealing a heavy blow to the luxury industry as a whole.
On the same day Hermès shares plunged 13%, Kering, which owns the Gucci brand, also saw its share price tumble 10% on concerns over war-related sales slowdown and the continued weakness of Gucci.
Industry leader LVMH Moët Hennessy Louis Vuitton (LVMH) had already announced the previous day that its results were under pressure due to the war in the Middle East.
The sharp fall in Hermès shares is being interpreted as a sign that the war’s impact on the luxury sector is more serious than previously expected.
With a market capitalization of 170 billion euros, Hermès has generally shown greater resilience to slowdowns than its rivals. Because its customer base consists largely of ultra-high-net-worth individuals, it has been viewed as less dependent on tourist spending than other luxury brands.
Its flagship luxury handbags, including the Birkin and the Hermès Kelly bag, are said to be virtually impossible to buy due to overwhelming demand. To preserve scarcity, Hermès expands its production capacity only gradually each year, even in the face of chronic excess demand.
However, this aura of invincibility has been shattered by the current 2026 Iran War.
The downturn at Hermès is fueling concerns about the overall health of the luxury industry. Analysts are now beginning to question how long Hermès can continue to deliver its once-dominant growth.
Reflecting these worries, Hermès shares have plunged about 30% over the past year.

dympna@fnnews.com Song Kyung-jae Reporter