On Wednesday, Hermès became the latest luxury brand to report unwelcome financial news.
In Hermès’ earnings, its performance missed estimates. Sales growth was 5.6% year over year, but analysts had been expecting growth of over 7%. And total revenues were $4.8 billion, compared to an estimated $4.9 billion.
Share prices at Hermès dropped accordingly, falling over 8% on Wednesday.
Like other luxury companies with disappointing earnings this week, like Kering, Hermès was significantly affected by the war in the Middle East. Sales in the region were down 6% last quarter, driven primarily by “geopolitical developments,” according to Hermès’ earnings report.
Disruption to sales in the United Arab Emirates was particularly painful for Hermès since it has two stores and over 400 employees in the country.
The results weren’t all bad. The Americas continue to be a strong growth driver for luxury, with Hermès seeing a 17% increase in sales in the region in the last quarter, the highest of any region. Notably, the growth was equally distributed across markets like the U.S., Canada and South America.
“In a tense geopolitical environment, Hermès maintains its course, true to its long-term strategy,” said Axel Dumas, Hermès’ executive chairman in a press release. “The fundamentals of the Hermès model are more than ever a differentiating strength.”
