Luxury stocks came under heavy pressure in European trading after disappointing first-quarter updates from Hermès and Kering reinforced investor fears that the conflict in the Middle East is hurting one of the sector’s most important customer bases. The sharpest reaction came from Hermès, whose shares fell as much as 14% at the open, while Kering also dropped steeply, dragging down a wider group of luxury names across Europe.
Hermès reported quarterly sales of 4.1 billion euros, with growth of 5.6% at constant exchange rates, below analyst expectations of 7.1%. The company said wholesale activity had been hurt by weaker sales to concession stores, especially in the Middle East and airports, while slower tourist flows also weighed on store performance in major European shopping destinations.
The results rattled investors because Hermès had long been viewed as one of the sector’s most resilient players. Instead, the latest numbers suggested that even top-tier luxury brands are struggling to escape the effects of geopolitical instability, softer travel activity, and uneven consumer demand. Analysts also pointed to renewed concern about slowing momentum in China, adding to worries about whether the industry’s hoped-for rebound can still materialize this year.
Kering’s results deepened that concern. Gucci sales fell 8% in the first quarter, extending a long run of weak performances and underscoring how difficult the brand’s turnaround remains. While Kering’s broader group sales were roughly flat and slightly better than feared, the continued weakness at Gucci reinforced the sense that the sector is facing both cyclical pressure and deeper structural challenges.
The selling spread across the luxury sector, with names such as LVMH, Christian Dior, Burberry, and Moncler also falling as investors reassessed near-term earnings prospects. The broader concern is that the war’s effect on Middle Eastern spending, coupled with weaker tourism in Europe and persistent uncertainty in China, is delaying any meaningful recovery in global luxury demand.
What was once seen as a temporary slowdown is now being treated more seriously by the market. For investors, the latest earnings suggest that luxury’s biggest brands are no longer insulated from the combined pressure of war, reduced travel, currency effects, and cautious consumers. For the sector itself, the question is no longer when growth returns, but whether the old assumptions about resilience still hold.
