Hermès Shares Drop Nearly 10% as China Stalls and Growth Narrows

PARIS, July 29, 2026, 11:56 CEST — Euronext Paris open

Hermès traded 9.85% lower at €1,528.50 by 11:06 CEST.
Second-quarter sales rose 6.7%, while Asia excluding Japan grew 2.5%.
Preliminary estimate: the Americas and Japan supplied about 58% of quarterly growth.

Hermès International SCA EPA:RMS shares fell 9.85% to €1,528.50 by 11:06 CEST. The decline followed second-quarter sales growth of 6.7% at constant currencies.

The result broadly matched expectations and improved only slightly from the first quarter. Investors looked past a better-than-expected 41% operating margin. Growth breadth was the problem.

Asia-Pacific excluding Japan generated €1.65 billion, or 40% of quarterly sales. Yet the region grew only 2.5% at constant currencies. It includes Greater China, Hermès’ most closely watched market.

By contrast, the Americas and Japan represented about 30% of sales. They supplied an estimated 58% of the currency-adjusted growth.

Region	Q2 revenue	Constant-currency growth	Estimated share of Q2 growth
Americas	€846 million	13.7%	40%
Japan	€394 million	12.3%	19%
Europe excluding France	€627 million	8.3%	19%
Asia-Pacific excluding Japan	€1.65 billion	2.5%	15%
France	€407 million	6.2%	9%
Other, mainly Middle East	€170 million	-2.4%	-2%

Preliminary estimate calculated from Hermès’ disclosed 2025 quarterly revenue bases and regional growth rates. Figures may differ slightly because of rounding.

That imbalance matters more than the headline growth rate. Hermès remains exposed to a large Asian market producing limited incremental revenue. Smaller regions are carrying much of the expansion.

Leather goods and saddlery sales rose 10.2% during the quarter. That business produces almost half of group revenue. Growth nevertheless missed the 10.8% Visible Alpha consensus cited by Reuters.

Executive Chairman Axel Dumas offered no clear China inflection point. “I see the Chinese market stabilizing, but I do not yet see a fundamental rebound,” he said. Reuters

The profit figures remained strong. First-half recurring operating income increased to €3.35 billion from €3.33 billion. The margin eased to 41.0% from 41.4%.

Adjusted free cash flow rose 18% to €2.18 billion. Restated net cash reached €12.93 billion after dividends and employee-related share purchases.

Currencies masked much of the operating progress. First-half revenue rose 6.1% at constant rates but only 1.6% as reported. Exchange-rate movements cut revenue by more than €360 million.

The market reaction contrasted sharply with relevant peers. Kering SA EPA:KER rallied after reporting improved Gucci trends. LVMH Moët Hennessy Louis Vuitton SE EPA:MC traded slightly lower after Monday’s results.

Company	Q2 underlying sales growth	H1 operating margin	Intraday share move
Hermès	6.7%	41.0%	-9.85% at 11:06
Kering	2.0%	12.8%	+11.58% at 11:28
LVMH	3.0%	22.5%	-0.40% at 11:38

Companies use different definitions for organic, comparable and constant-currency growth.

Hermès therefore grew fastest but received the harshest verdict. Kering’s lower absolute growth was rewarded because its recovery accelerated from a weak base.

Valuation helps explain that response. Google Finance showed Hermès at about 35.5 times trailing earnings. LVMH traded near 21.4 times, leaving Hermès with a roughly 66% premium.

JPMorgan Chase NYSE:JPM analysts said investors would focus on Hermès’ “slower pace of reacceleration vs peers.” The regional data support that concern despite the superior margin. Reuters

Hermès retained its medium-term goal of ambitious constant-currency sales growth. It gave no numerical target. Third-quarter revenue is scheduled for October 22.

Risks: A deeper China slowdown would weaken the group’s largest sales region. A stronger euro or renewed Middle East disruption could also reduce reported growth. The valuation premium leaves limited room for another narrow quarter.

What caused Hermès shares to drop nearly 11% following the results?

Hermès shares last traded at €1,512.50, falling 10.79% on Wednesday. The day’s low was €1,507.50, compared to the previous close of €1,695.50. Second-quarter sales were in line with forecasts and did not exceed expectations. Leather-goods grew 10.2%, underperforming the 10.8% consensus estimate. Performance in China indicated stabilization but stopped short of the widespread recovery anticipated by investors. Market participants expected stronger results. Investing.com

Was there a real increase in sales growth in the second quarter?

Revenue for the second quarter stood at €4.094 billion, a rise of 6.7% at constant exchange rates. This marks an acceleration of 1.1 percentage points from the 5.6% increase reported in the first quarter. In France, growth rebounded to 6.2%, reversing a 2.8% decline recorded in the previous quarter. The Middle East also saw an improvement, though sales declined by 2.4%. For the first half, revenue reached €8.163 billion, up 6.1% at constant currencies. While growth picked up, the increase remained moderate.

Is China starting to bounce back?

Second-quarter group revenue from Asia-Pacific excluding Japan reached €1.651 billion, marking a 2.5% rise at constant exchange rates, up from 2.2% in the previous quarter. The region accounted for around 43% of group revenue in the first half. Management noted growth in Greater China and highlighted a strong performance in Korea. Axel Dumas said China is showing signs of stabilization but has not yet seen a major recovery. Uncertainty in China remains the central concern.

Do leather goods continue to drive the business?

Leather Goods and Saddlery reported second-quarter revenue at €1.912 billion. Growth at constant currency was 10.2%, just under the 10.8% forecast by analysts. The segment contributed €3.761 billion in the first half, accounting for 46.1% of total group sales. Hermès launched its twenty-fifth leather workshop in Loupes in April. Three more leather workshops are planned in France between 2027 and 2030.

What was the performance of operating margins and earnings?

Recurring operating income increased marginally to €3.351 billion compared with €3.327 billion. The operating margin slipped by 40 basis points to 41.0%, though it remained above market forecasts, Reuters reported. Group net profit edged down to €2.238 billion from €2.246 billion. Diluted earnings per share dropped to €21.32 from €21.39. Net profit, excluding France’s exceptional corporate levy, came in at €2.5 billion.

To what extent did exchange rates impact reported growth?

Currency fluctuations cut over €360 million from reported revenue in the first half. Revenue increased 6.1% at constant exchange rates, but just 1.6% as reported. The impact in Japan was pronounced: sales climbed 11.0% at constant rates, yet declined 2.1% on a reported basis. In Asia-Pacific excluding Japan, sales grew 2.4% at constant rates, but dropped 1.2% when reported. Exchange rates continue to pose significant risk to second-half comparisons. Hermes Finance

Is Hermès’s cash position sufficient for investments and returning value to shareholders?

Adjusted free cash flow increased by 18%, reaching €2.182 billion. Operating cash flow totaled €2.694 billion, even as profit was down slightly from a year earlier. Operating investment amounted to €344 million, and repayments on leases neared €200 million. Restated net cash stood at a robust €12.926 billion at the end of June. Hermès distributed €1.915 billion in dividends and allocated €160 million to share buybacks. Liquidity is not an urgent concern.

What factors are expected to influence the shares in the week ahead?

Management maintained its ambitious goal for medium-term revenue growth at constant exchange rates, but once again did not give specific 2026 sales or margin targets. Dumas stated the group began the second half with confidence. The next update from the company is set for third-quarter revenue on October 22. In the meantime, investors will be monitoring China, currency movements, and changes in analyst forecasts, which are expected to be the main drivers in the upcoming week. Hermes Finance

Does Hermès represent value following today’s drop?

Hermès traded at €1,512.50, placing its equity value close to €160 billion. The company reported group net profit of €4.524 billion for the full year 2025. This results in a trailing price-to-earnings ratio of about 35. Removing €12.926 billion in restated net cash gives an enterprise value near €147 billion, or roughly 9.2 times its 2025 revenue of €16.002 billion. The shares are less expensive than before, but the valuation remains high. Investing.com

To what extent did Hermès weigh on the CAC 40?

According to Euronext’s June 30 breakdown, Hermès makes up 2.70% of the CAC 40 index. The published document, however, continues to show the March 31 figure of 2.92%. This inconsistency creates ambiguity over Hermès’ real-time index weight. If using the 2.70% weighting alongside a 10.79% drop in Hermès shares, the estimated pull on the CAC 40 is about 29 basis points. The true effect varies in real time as weights and other index components fluctuate.

Mateusz Kaczmarek Latest posts

Mateusz Kaczmarek is a financial and technology journalist at TS2.tech, covering stocks, artificial intelligence, semiconductors and global market developments. A graduate of the Poznań University of Economics and Business, he previously worked in financial analysis before moving into business journalism. His reporting focuses on technology companies, market trends and the forces shaping global investment markets. Follow Mateusz Kaczmarek on Google News.

View all

Leveraged ETFs Drive Swings in South Korean Stocks
July 29, 2026, 7:14 AM EDT. Leveraged ETFs, introduced in the U.S. in 2022, have rapidly expanded in Asia, with particular focus on names such as Samsung Electronics and SK Hynix. These products amplify daily returns-sometimes up to fivefold-by employing futures and swaps, leading to more pronounced gains and losses. In South Korea, heavy inbound investment has triggered a feedback loop, intensifying market volatility and prompting regulatory worries. The Hong Kong-listed SK Hynix two-times leveraged ETF grew its assets 20 times before a sharp reversal.