Hermès International Société en commandite par actions ($RMS)

Ladies and gentlemen, welcome to the 2026 Q1 Revenue Analyst Conference. The floor is now to Eric du Halgouet, CFO; and to Alexandra Boucheron, in charge of Investor Relations. Over to you.

Good morning, one and all. Thank you very much for joining for this conference. The group's consolidated revenue amounted to EUR 4.1 billion in the first quarter of 2026, up 6% at constant exchange rate with double-digit growth in Americas, Japan and Europe, excluding France. Moreover, Greater China continued its slight growth. This level of growth is all the more remarkable since the group has enjoyed strong growth over recent years, especially in 2024, 2025, especially in Greater China when the rest of industry was not growing. Due to the significant negative impact of currency exchange rates, around EUR 300 million, sales declined slightly by 1% at current exchange rate. At the end of March 2026, Americas, Japan and Europe, excluding France, recorded strong growth in sales despite the slowdown in tourist flows linked to the situation in the Middle East, sales in the group stores increased by 7%. Furthermore, wholesale activity was significantly affected by lower sales to concession stores, particularly in the Middle East and in airports. In keeping with our policy of sharing the fruits of our growth at the beginning of 2026, Hermes distributed EUR 328 million to employees. In respect of 2025, this includes profit sharing and incentive schemes in France and a EUR 3,000 bonus to all employees. In a tense geopolitical environment, Hermes maintained its course true to its long-term strategy, supported by its abundant creativity, its uncompromising quality and the loyalty of its customers. Hermes continues to be profitable to grow in 2026 with confidence and conviction. The fundamentals of the Hermes model are more than ever a differentiating strength. Therefore, for 2026, our outlook remains unchanged, and the group confirms an ambitious goal for revenue growth at constant exchange rates. Over now to Alexandra for the regional and division breakdown.

Good morning, one and all. Let's take a look at the regional breakdown. The figures are at constant exchange rate. At the end of March 2026, as Eric mentioned, Americas, Japan and Europe, excluding France, recorded strong growth in sales. France and Middle East are struggling because of the current geopolitical context. First of all, Asia, bar Japan is at plus 2%. So recorded growth in Q1, driven by the loyalty of local clients and the House's value strategy. Greater China continued its slight growth. Korea maintained solid momentum, while performance in the rest of the region was more subdued. In January, a new store opened in Hanoi, Vietnam, and that strengthened the house's presence in the country. Japan next grows also plus 10%, continues to record solid growth supported by strong footfall and the loyalty of our local clients there. The store, Umeda Hankyu in Osaka was expanded and renovated in March. And then Americas, plus 17%, delivered an exceptional Q1 after a strong performance in 2025. Growth is balanced across all the mid-tier, the United States, Canada and South America. Europe now excluding France, posted 10% growth. So once again delivered a solid performance supported by local demand. France, minus 3% was affected by a slowdown in tourist flows, particularly in March linked to the situation in the Middle East. The 16th edition of the Saut Hermes event, which brings together the world's leading showjumpers was successfully held under the glass roof of the Grand Palais in Paris at the end of March. This international event combines sporting excellence and the promotion of our craftsmanship and know-how. The area other, minus 6%, primarily includes the Middle East, which was significantly impacted by recent geopolitical developments in the region from March onwards, notably the UAE, Kuwait, Qatar and Bahrain. Let's move on now to the division breakdown, also at constant exchange rate. At the end of March 2026, leather goods and saddlery, other Hermes divisions and silk and textiles recorded robust performances. Leather goods and saddlery is at plus 9%. It benefited from the strong desirability of the collections and increased production capacity. The Faubourg Express bag, a new style with an elongated format, echoes travel bags and the Collier d'attelgage bag, echoing these curved line, straps and rings of the eponymous collar has been particularly successful as well. The Herbag line has been enriched with a new mini format, the Herbag 20. Last Friday, we inaugurated our new production workshop in Loupes. Production capacities continues to expand with the planned workshop opening of Charleville-Mezieres in 2027, Colombelles in 2028 and Les Andelys in 2030. So that's for the leather workshops due to open. Hermes thus continues to strengthen its local footprint in France and developing employment and training opportunities here. The ready-to-wear and accessory sector delivered a stable performance and continues to grow. The women's fall/winter 2026 show at the Garde Republicaine in March was very well received. Following its January unveiling in Paris, the latest men's fall/winter collection by Veronique Nichanian, Artistic Director of Hermes Men's Universe of 37 years, sparked great emotion at the February presentation in Tokyo. The silk and textiles sector is up 8%, recorded solid growth driven by continually renewed creativity across both the women's and men's collection. The L'esprit s'envole carre scarf perfectly illustrates this creative vitality, poetically echoing the theme of the year, Venture beyond. Perfume and Beauty recorded stable sales. The Hermessence collection welcomed Musc Pallida in February, while the Jardin collection was enriched with a seventh creation: Un Jardin sous la mer, aligned with this year's theme and promising the discovery of an unexpected garden. In January, Hermes beauty also launched Plein Air, its first skincare foundation available in 34 shades. In a still challenging environment, the Watches metier, minus 4%, expanded its offering by presenting several timepieces in Geneva at the Watches & Wonders Show, showcasing also its know-how with the new Hermes H08 featuring a state-of-the-art skeletonized titanium movement and the Arceau Samarcande, the minute repeater, which enriches the family of great complications. Hermes also continued to expand its production capacity with the extension of its watchmaking facility in Le Noirmont, Switzerland, scheduled for completion by 2028. The other Hermes divisions grew by 7%. They include jewelry and the Home Universe, which continue on their momentum, showcasing the full creative strength and singularity of Hermes. The Haute Bijouterie event to Double Tour, celebrating the excellence of the house's jewelry craftsmanship took place for the first time in Tokyo in March. It presents a jewelry narrative in motion and the beauty of an ever-renewed bond. The new porcelain service, Natures Marines, was unveiled in January in Paris. Thank you very much for your kind attention, and we are now available if you have any questions.

[Operator Instructions] The first question is from Luca Solca from Bernstein.

First of all, I was wondering, given the growth that you're recording today, I wondered if you were maybe up against more competition with the renewals at CHANEL, at Dior. In our analysis, we've seen that the footfall in China benefits to novelty. So with this new competition from outside, are you going to change your growth formula at all or not? So do you think that you need to do more of the same, basically? Or do you need to recalibrate your strategy? Second question, are there some temporary elements that impact the availability of products or of stocks during Q1. That would help us to better understand the results of Q1.

Thank you very much, Luca, for those questions. As I mentioned, the fundamentals of Hermes are going to be crucial going forward, especially in this more complicated context. Therefore, we are not going to change the Hermes model. Creation lies at the heart of everything that we do. We have this freedom to buy, freedom to create that we're going to stand by. And what we see for the latest collections is that all the new products were very successful. And now on your question on stocks. We have good stocks at the moment, especially in ready-to-wear and shoe. We had a very good sell-through rate for the spring/summer collection, which was sold during Q1. And we have stock ratios which are quite low. But all of this is going to be addressed in the next few months. But in any case, we are not going to change the model of the group to answer your first question. Will there be more innovation, do you think?

The next question comes from Kepler Cheuvreux, Charles-Louis Scotti.

I have 2 questions. First of all, could you quantify the impact of the conflict in the Middle East on organic growth of the group. What's the direct impact in the region, but also the impact across the world. I know that other groups have done it. Second question, I understand that there's a slowdown in Europe and in France due to a drop in tourism. But for the impact outside of Japan, I don't really understand because I see that other brands are growing faster. So could you tell us a bit more about the APAC region?

Okay. So a quick update on the Middle East. I have to start by thanking our teams who are doing a great work out there. We regularly reach out to them, and we focus on their safety first. This is why some of the stores actually were closed at the beginning of March or we changed the opening hours. But what is quite amazing is to see that our employees are all there. We've got about 500 people out there in the Middle East, 400 In the UAE and for Bahrain, Kuwait and Qatar, another 100 people. What you need to bear in mind is that for January and February, we had great double-digit growth, which was very homogenous across these 2 months. It's only in March that the revenue started to go down. In the Middle East, we have 6 stores, 3 of them are directly operated by us. In the UAE, we have 2 stores, 1 in Abu Dhabi, 1 in Dubai, and they make up most of the revenue for the area. And then we operate through 3 concession stores in Qatar, Bahrain and Kuwait. So we have no stores in Saudi Arabia to date and no e-commerce at local level either. So when you take this region, which is called other, which mainly makes up the Middle East, you can see that it makes up 4.3% of the total revenue of the group. But if you add to this, the sales, 2 Middle East clients that travel to other regions of the world, mainly in U.K., Italy and Switzerland and France. And Italy is a country that is nonetheless growing very quickly in spite of the fact that Middle East customers make up a big share of the revenue there. So we had to close some of the stores at the beginning of March, mainly in Dubai and then in Bahrain and Kuwait because of the airports that closed and for security purposes. So our revenue dropped by 20%, 30% depending on the day and on the stores that we operate directly. So to answer your question, we estimate that the impact for the group will be 1.5% for the group for Q1. So the 7% I mentioned earlier should have been 8.5% if we hadn't had these developments in the Middle East. And then early April, we can see that there is a slight improvement because all the stores are now open in the Middle East. And I'd like to conclude by saying that our fundamentals remain strong with great teams out there and loyal clients. And we are confident when it comes to the future developments for the region. And to answer now your second question on Asia Pacific. I'm going to start with Greater China. So as for 2025, the region is growing slightly compared to a high basis point. We've had several years of constant growth in a difficult context, as you know. So we've got a quite homogenous growth in Greater China, be it Mainland, Hong Kong, Macau and Taiwan. And that was -- it's also worth noting that we had a great Chinese New Year last year. So we are growing slightly compared to 2025, but 2025 was a high comparison point. And we talked about the end of year trend in 2025. We see that traffic or footfall rather is flatlining, which means that we are very confident or is slightly picking up, so we're slightly confident. No other trends that are noteworthy for us for beginning of April for Greater China. Now in Asia, we have 2 markets that are performing really well, Korea and India and a more subdued situation in Singapore, for example. And there's also the case of Thailand, Thailand, where we have more export customers. So the growth that you see at 2% if you remove retail, which was disturbed, retail is at 3%.

The next question is from Anne-Laure Bismuth from HSBC.

Well, I have 2 questions for you. First of all, on current trading. Thank you very much for clarifying the early April trends. But could you tell us about current trends at group level in April? How do they compare? And second question on leather goods. In light of a performance, which is slightly under what was expected, could you tell us if your 6% increase in volumes and 6% increase in sales, are you going to stick to that. Because that would mean that there should be a strong speed up in the rest of the year. Are you still confident you can reach that.

Well, for all geographical regions, there is no disruptions in the trends. We see that there is a strong momentum in the U.S., for example. But for the rest, no change in our objective. So for leather goods, indeed, we have a 9% growth in Q1. And it's worth reminding also that our annual objective is not necessarily linear from 1 month to the next or 1 quarter to the next, and that's down to our artisanal model. There can be some issues with manufacturing, which means that there are some delays that we catch up later. So from one quarter to the other, our production is not linear. So our overall annual growth is -- or growth objective remains unchanged. And we were also very glad to open our 25th leather goods workshop in Loupes, which is the second in the border region. And just a final word on this to say that demand remains very strong in all markets, both for iconic bags and for all the other bags. So it's worth reminding that growth for leather goods is going to pick up, speed up in months to come gradually.

The next question is from Edouard Aubin from Morgan Stanley.

Two questions on my side. Could you please give us a bit more information on your exposure to airports because I know that you operate these stores directly. So tell us more about international travelers and your exposure to that. And you also have a greater exposition to local clients than your competition. So could you give us some numbers on that exposure to international tourists? And second question, you just talked about growth, 6% for leather goods for this year. You tell us that this remains unchanged. But I asked Axel Dumas the question in February. For the longer term, are you not going to reduce the number of iconic bags that you make to keep them desirable, very much like what Ferrari does or not.

Right. Regarding travel retail. So we mainly operate concessional stores. It's not a huge share, but out of the 60 concession stores that we have, about 40 of them are affected. Deliveries to the network was affected because of the drop in footfall in airports. But also because it was harder to deliver these goods because they travel by air and often go through Dubai, especially for stores that are located in Asia, South Asia and Korea. Regarding now tourism, which was your second question. The 2 regions where we are the most exposed to these export customers or tourism is, number one, France, especially in our Parisian stores. And we see it quite clearly in France because our stores on the coast are doing really well and the stores outside of Paris and in France are doing really well. But the Paris stores are more affected. And if you look at the nationality breakdown, we see that it's mainly clients from the Middle East and from Greater China who come less to Paris. And that is offset by a European clientele that has traveled to Paris and also American clients that travel to Paris. As I mentioned, Europe is affected by tourism, but less so. We can see in Europe a drop in the number of tourists from the Middle East. We see it in Switzerland, in the U.K., for example, but also in Italy. But there is, however, a significant increase in the number of U.S. customers in these places. What's important to note for Europe is that local customers continue to grow, double-digit growth actually, and that is very important in these current times. And then a final word on leather. There is no change to our strategy. We do have iconic products, of course, but we also have about 15 products, which make up a huge part of the volume. And we remain true to our policy of freedom to buy. So the markets, the stores are free to buy what they want and to give their chance to new models, some disappear after a couple of years, others emerge later on down the road, 4, 5 years later. So we're going to stick to that. But in light of our production capacities, we make sure that we have this capacity to also produce new models and not just focus on the iconics because we want to create other bags, not just Kelly and Constance.

And the next question is from Thomas Chauvet from Citi.

Two questions. Number one, on jewelry and on the other divisions that are at plus 7% after 6 years of double-digit growth. There is a slowdown in volumes in that segment. Could you explain this for us, please. Because we've seen jewelry speeding up in T1 -- or Q1, sorry, for your competition. And secondly, on prices and on the resistance of clients to price increases. We've seen your figures for Q1. We have factored in the 1.5% impact of the Middle East. But do you think that the 6% price increase explains, to some extent, the greater volatility of these categories. And how does it affect your aspirational clients? I think Axel Dumas spoke to this last year. We know that these aspirational clients bought a lot of Hermes products between 2020 and 2023. What of them now. So yes, a comment on price increases, please. I know that the aim is to cover your input cost, but clients don't necessarily see it that way or think about it that way.

Well, regarding your first question on the other Hermes division, as you mentioned, it makes up jewelry and the Home universe. What I can tell you is that for jewelry, we haven't got the exact figure, but it's growing, and it's growing close to double digits, whereas the Home universe and Tableware suffered a bit more of the slowdown and the current context in the Middle East. So jewelry to conclude, continues to grow strongly and to drive the growth of the group, and there's no changes in the trends here. Regarding price increases now. So as we always say, we remain true to our principle of passing through our input costs as little as possible. We've increased wages of our employees. We've paid out bonuses. We have a free share plan as well. So you need to bear that in mind. And then for divisions like silk, we had great performance. And our conclusion is that it's really the quality of the collections, the colors, the formats that really make a difference. And we don't see any issues pertaining to price increases right now. I think that was your question in a nutshell. And yes, that's all we have to say on that. Alexandra says, no, I think we've answered that question.

And the next question is from Carole Madjo from Barclays.

Two questions on my side. First of all, on Middle East. Now the region is quite profitable. So how is that going to impact your margins for H1 and for the full year. And then on ready-to-wear, there's a slowdown in Q1 because it has remained flat. Could you tell us why there is this slowdown? Is it because of shoes, belts? Are they underperforming compared to others? And how can you maybe foresee growth in this area for Q2 and the rest of the year?

So at this point, the impact of the slowdown because of the Middle East is not significant on profitability. It remains to be seen whether the events continue for a month or 2. But if it's just 2 months, I think that we can absorb this impact without too many difficulties. Regarding ready-to-wear and accessories, we are indeed flat for Q1. But here, the developments are slightly changer. Men and women's ready-to-wear are slightly growing. But conversely, fashion accessories are slightly down and shoes are growing slightly. Overall, what we can say is that for ready-to-wear and for shoes, these divisions are strongly impacted by the slowdown in the Middle East and the slowdown in tourist flows towards France. But shoes, be it the sneakers and the Oran sandals are very successful in the Middle East. So that had a huge impact in Q1. And as I mentioned at the top, we've got a great sell-through rate for the new items for spring/summer collections for both men and women ready-to-wear. And we have low level of stocks for these novelties because of sell-through rates that are beyond our targets. So we've got healthy stocks overall. And what I can tell you is that the fundamentals for shoe and ready-to-wear are very solid. So strongly impacted that division by the developments in the Middle East.

The next question is from David Da Maia from CIC CIB.

My questions have been answered actually, but a quick question on the sequential performance across Q1. We see that LVMH and Kering have spoken to an improvement of trends in March, excluding the Middle East. Have you seen the same?

Well, if you exclude the impact of the Middle East, we are, yes, slightly improving in March, but January, February, March are all, yes, months where we've grown homogenously, a slight improvement in March.

The next question is from Zuzanna Pusz of UBS.

I will stick to 2. So first of all, on the tourism exposure. I appreciate -- I guess I'm just a little bit confused. I mean, having followed the company for over a decade, you always said you had a very low exposure to tourism and that actually majority of your sales were locals. And I guess now there is some impact. So I appreciate this is something you didn't want to quantify before, but I guess, given how material it seems to be now, is there any chance you could tell us what percentage of your sales in Europe is to tourists. Other companies say on average is, I don't know, half of their sales in Europe. So any number would be very helpful for us and I think for investors to really understand the situation. And secondly, maybe specifically on France. I know that I think in the French region, you sometimes book also wholesale sales and travel retail. So would you be able to tell us what -- let's say, what is actually France region in terms of the actual retail performance. I'm asking because I wonder if this is not a region specifically exposed to people coming in because they know, well, at least that's sort of what people argue on social media that it's easier to get a bag in France in some of the stores by buying ready-to-wear and shoes. But obviously, it's just all anecdotal, but -- so I guess my question is what is actually France retail.

So regarding tourists, the region which is more impacted is France, where it's more than 50% of our sales are linked to sales to tourists. And in France, as I mentioned before, we have a strong decrease of the Middle East customers, which is partly offset by a significant increase of the American customers. In Europe, to a lower extent, but we observed the same trend, decrease of Middle East, offset by Americas and Greater China customers is slightly higher, but this is not significant. Regarding France, we -- so you can see minus 3% for the first quarter. If you exclude sales to Travel Retail and concessionaire, the decrease is only minus 1%.

Excellent. Just to follow up on tourism. So you said more than 50% of sales in France is tourism. But if we took all Europe together, would you be able to quantify just so we can compare it to other companies. Is it less than 50% for all of Europe or also roughly 50% for all of Europe together with France.

More than 50%. And what is important is that in France and in Europe, sales to local customers are increasing. And even in Europe, it's double-digit increase.

The next question is from Melania Grippo of BNP Paribas.

This is Melania Grippo from BNP Paribas. I've got 2 questions. First, I wanted to ask you regarding your store openings in Q2. I think I recently saw the openings of your store in Beijing. Could you please give an update of the stores, especially the large ones that you are going to open in Q2. And then I would like to understand if when talking the performance of leather was homogeneous across countries.

So Alexandra will give you the main perimeter impacts we expect for the Q2, Q3 and Q4 because we had a very few -- very limited number of perimeter impact in Q1, while we have quite a big planning for the remaining part of the year.

Yes, exactly. So as Eric said, pretty negligible impact over the first quarter. And then for the rest of the year, I would say that we have around 20 projects in the pipe for the coming quarters. In terms of opening, we have a few. I can give you some examples, 3 openings projects in Americas, 1 in Chicago, and 2 in New York, namely one in Williamsburg and one in Manocet. Another project that we have in Japan, an opening in Nagoya in Q2. And the last, an opening that just took place at the beginning of April of a new store in Beijing in Sanlitun that we talked about. Maybe talking about renovation with enlargement of stores, I would say that there are 2 key projects that we've already communicated about. One is beginning of mid-June in the U.K., in London, in Bond Street. So it's actually moving a store from one location to the other. But it will be a very nice Maison that we will open mid-June. And maybe another project that I could name is the one in Geneva, where we will actually open a new store in Q4 this year. But obviously, we have other projects in Americas, in APAC or in Japan throughout the year in terms of renovation with enlargement. And maybe just to give you a sense of the impact that it will lead to over the year in terms of growth contribution that should limit to a bit more than 1% contribution on sales for the whole year. So -- because as you know, we have -- when we do open new stores, sometimes we close other. So I would say that net-net, it should be a bit more than 1% contribution.

So regarding your second question on -- we have the same pace of growth by region, except for Middle East, where it's a little bit higher due to the circumstances that you can understand.

The next question is from James Grzinic of Jefferies.

Two questions, please. First one, can you please clarify that point that you made on air freight challenges. Did that only impact the wholesale channel. Did that impact also retail inventories in Asia in the quarter. And if so, is that included in the 150 basis points impact that you quantified for us from the Middle East? Secondly, it would be great if you could please unpack the Greater China slight growth in Q1 performance. Can you perhaps differentiate by product category. Should we think of leather, for instance, at mid-single-digit growth in Q1 for Greater China. That would be very helpful.

So the growth of plus 6% for the first quarter, as we said, is a plus 7% in the retail activity, and it's minus 7% in the wholesale business. Where does it come from? It's mostly from Travel Retail and sales to concessionaire. As I explained when speaking about Middle East, Qatar, Bahrain and Kuwait are today concessionaire, and we had to stop or to postpone our deliveries. So it's more for the concessionaire business for Travel Retail, it's more a question of postponement than cancellation for the time being. It's timing.

Okay. I just wanted to clarify perhaps for translation purposes that there wasn't any impact on availability of air freighting via the Middle East to Asia that may have impacted inventories availability in Asia on leather. Just wanted to triple check that.

You mean if we had difficulties to deliver our leather products to China.

Correct. Yes.

No, not specifically. No, it's very much linked in the wholesale, I would say, to the Travel Retail. So obviously, less travelers impacting Travel Retail. And on top of that, we have part of the business that we do operate in the Middle East that is still under concession. So that goes into wholesale as well. So the Qatar, Bahrain and Kuwait stores, we have one store in each of those place, I would say, and that are part of the wholesale as well. So obviously impacting negatively the business in Q1 of the wholesale.

Very clear. I just wanted to exclude a second derivative impact. So that's clear. yes. And on that Greater China, perhaps if you could unpack leather versus non-leather would be super helpful.

So in China, the growth of leather is more or less in line with the non-leather businesses, which is good for us. It's a slight increase combined of leather and non-leather business.

Okay. Great. Thank you very much. I think, Eric, maybe you would like to conclude.

Well, thank you very much for your kind attention and for all your very interesting questions. I'm going to conclude by saying that in this uncertain geopolitical context, the fundamentals of Hermes make us an interesting proposition, a differentiating also feature.