The recovery of the luxury goods industry has been hindered by the conflict in Iran, with Birkin bag maker Hermes International SA reporting a slowdown in sales growth for the first quarter. The French company posted revenue of €4.07 billion (equivalent to $4.8 billion) for the first quarter of this year, representing a 5.6% year-on-year increase at constant exchange rates. This marks a notable deceleration compared to the 9.8% sales growth recorded in the previous quarter. When calculated using current exchange rates, Hermes' first-quarter sales declined year-on-year, primarily due to a significant negative currency impact amounting to €290 million. According to survey data from market research firm Visible Alpha, the company's overall revenue fell short of market expectations. Analysts had previously forecast revenue of €4.16 billion. For years, luxury brands have faced challenges from shrinking demand for high-end goods, alongside difficult market conditions including trade disputes and geopolitical instability. The industry had initially pinned hopes on a recovery this year, driven by improved performance in key markets such as the United States, but the conflict in Iran has cast a shadow over these expectations. Hermes stated, "In an economic and geopolitical environment that remains uncertain, the group is confidently approaching 2026." The company reaffirmed its medium-term sales growth target, measured at constant exchange rates.
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