Hermès reports solid half-year figures – shares plunge by eleven percent

Adjusted operating profit rose by more than 40 percent to 3.35 billion euros. Hermès Eric Du Halgouet said at an investor conference that he expects smaller price increases next year than in 2026. This statement alarmed investors: the Hermès share fell at one point by around eleven percent to 1,501 euros – a level last reached in early 2023.

For comparison: the share's all-time high was 2,957 euros in February 2025. Since then, the stock has lost almost half of its value. The price drop on Wednesday was further amplified by the fact that the leather segment, one of the group's flagship divisions, fell short of expectations.

Americas grow strongly, China stagnates

The North and South America region grew almost 14 percent on a currency-adjusted basis and was thus the most important growth driver. Japan also performed strongly. Europe came in somewhat weaker than expected. In the Middle East, revenue declined again, albeit less sharply than in the previous quarter. Hermès said the region had shown "remarquable résilience dans un environnement géopolitique instable".

At the segment level, Hermès posted currency-adjusted growth in nearly all areas; only perfume and beauty products sold worse than in the previous year. The business model continues to rely on deliberate scarcity – long waiting lists for the high-priced Kelly and Birkin bags are a firm part of the strategy.

Business model: scarcity as strategy

Hermès is benefiting from a recovery in its French home market, which is particularly popular with tourists. At the beginning of the year, the group had still suffered from the fallout of the Iran war and had to absorb a drop in revenue. In the ongoing downturn of the overall luxury market, Hermès has so far fared better than many competitors.

Analyst assessments are subdued

Analyst ratings were subdued. Adam Cochrane of Deutsche Bank called it a solid quarter with revenue slightly above expectations, but described the quality of growth as "gemischt". The leather segment, despite double-digit percentage gains, performed somewhat weaker than expected. Europe grew slightly less than projected, while the Americas and Japan were strong.

James Grzinic of Jefferies assessed the group's revenue growth as "wenig beeindruckend" – measured by Hermès' historical standards. He criticized the ongoing stagnation in China, but also attributed it to an artificial scarcity of supply. The persistent scarcity was an integral part of the brand strategy.

Outlook: what the coming quarters could bring

The Hermès share is monitored by several major houses on the financial markets. Bernstein Research rated the stock "Outperform" on 30 June 2026, RBC Capital Markets also assigned "Outperform" on 2 July 2026. Berenberg Bank rated the share "Buy" on 14 July 2026. UBS AG, however, rated Hermès only "Neutral" on 2 July 2026.

The results mark a turning point for Hermès: after a subdued start to the year with setbacks from the Iran war, the group is once again trending upward in the second quarter. Valuation on the stock market remains volatile, however – concerns over waning pricing power and weaker growth dynamics in China are weighing on the share price.

For the luxury sector as a whole, Hermès' figures are an important indicator. The group is regarded as a benchmark for how much spending appetite top customers still have in a geopolitically uncertain environment. If even Hermès is stagnating in China with its loyal clientele, this points to broader weakness in the premium segment.

The coming quarters will show whether the recovery observed in the home market and in the Americas holds up. Pricing policy will also play a central role: if CFO Du Halgouet actually implements the announced more moderate price increases, this could cost margins in the short term, but strengthen the exclusivity of the brand in the long run. Investors will be looking to the next investor conferences and the Q3 figures in October.

Despite all the concerns, Hermès remains a heavyweight in the EuroStoxx 50 and a favorite of many long-term oriented investors. The combination of scarcity, high margins and a loyal customer base has set the group apart from many competitors for years. From management's perspective, the current period of weakness is more of a dent than a structural break.

The immediate reaction of the stock market, however, was unusually sharp: a share price loss of eleven percent in a single day is atypical for a luxury stock regarded as defensive like Hermès. Market observers interpret this as a sign that expectations for the second half of the year remain high – and that any indication of waning pricing power is punished immediately.