Hermès Q1 Growth Slumps as Iran-Israel Conflict Disrupts Middle East Luxury Sales

Gate News message, April 21 — Hermès reported that escalating tensions between Iran and Israel reduced its first-quarter worldwide growth by approximately 1.5 percentage points, as temporary store closures and a sharp decline in tourism weighed on sales. The luxury goods maker posted quarterly revenue of €4.1 billion ($4.4 billion), with Middle East sales falling 6% as the conflict intensified from March onward.

Underlying growth would have reached 8.5 percent without the war impact, compared to the actual 7 percent reported, according to CEO Alexandre Dumas. The Middle East, which accounts for roughly 4 percent of Hermès’ global revenue, saw particularly severe disruptions. CFO Eric du Halgouët stated that the company temporarily closed stores in Dubai, Bahrain, and Kuwait in early March following Iran’s missile and drone strikes on Gulf states, with some locations experiencing revenue declines of 20 to 30 percent depending on the day. Hermès employs approximately 500 people in the Middle East, with about 400 based in the UAE, a region that had been one of the group’s fastest-growing markets with sales rising roughly 15 percent the prior year.

The conflict’s impact extends beyond regional stores. Hermès’ French business faced particular pressure, as more than half of its sales are linked to tourism and fewer Middle Eastern customers visited Paris. Other luxury groups including Richemont and Ermenegildo Zegna Group reported similar exposure to the region. According to consultancy Bain & Company, 50 to 60 percent of Middle East luxury sales originate from tourists.