Shares of Hermes plummeted 14%, while Kering fell 10%. The companies’ updates also weighed on the broader luxury sector, with Burberry<\/a>, Christian Dior<\/a>, LVMH<\/a>, and Moncler<\/a> the worst performers in the pan-European Stoxx 600 index<\/a>, down between 2% and 3% each.<\/p>\n “Despite the slowdown in tourist flows linked to the situation in the Middle East, sales in the group’s stores increased by 7%,” Hermes said Wednesday as it reported sales of 4.1 billion euros ($4.8 billion) in the first quarter. <\/p>\n “Wholesale activity was significantly affected by lower sales to concession stores, particularly in the Middle East and in airports,” the company added. <\/p>\n Meanwhile, Kering<\/a> reported sales below expectations late Tuesday, as the luxury conglomerate’s biggest brand, Gucci, remained a drag despite efforts by new CEO Luca de Meo to turn the company’s fortunes around.<\/p>\n First-quarter revenue came in at 3.57 billion euros, down 6% year-on-year on a reported basis, and flat on a comparable basis at constant exchange rates.\u00a0<\/p>\n Gucci’s organic sales fell by 8%, a bigger drop than the 6% decline seen in a sell-side consensus cited by analysts.\u00a0<\/p>\n Kering, which also owns brands Yves Saint Laurent, Bottega Veneta and Balenciaga, also said retail revenue in the Middle East declined by 11% in the first quarter, following growth over the first two months of the year.<\/p>\n With 79 stores in the region, the Middle East represents around 5% of retail revenue.<\/p>\n While results underwhelmed, investors’ attention is firmly on the company’s Capital Markets Day on Thursday, where de Meo will present Kering’s strategic roadmap “ReconKering.”<\/p>\n “Gucci remains our top priority. A comprehensive turnaround is underway, with decisive actions across client, distribution and, above all, the offer,” de Meo said in a statement after the bell on Tuesday.<\/p>\n Bernstein analyst Luca Solca described the results as a “reality check.” <\/p>\n “The 1Q26E update shows what we have observed several times over with self-help stories: it is easier and faster for the market to believe in a revival, than it is for management to produce it,” the analyst said.<\/p>\n Stock Chart IconStock chart icon Kering stock has outperformed most peers over the past year.<\/p>\n It comes as Kering, like many of its luxury peers, has seen years of contraction following a boom that ended in 2022. Demand spiked during the Covid-19 pandemic, leading to price hikes that eventually alienated customers. Coupled with weak demand in China, formerly one of the sector’s main growth drivers, businesses suffered.<\/p>\n Last year, Kering appointed de Meo to get the company back on a growth track. While he was a surprising choice for many, given his background in the auto industry, the stock is up about 10% since he officially took on the role on Sept. 15, outperforming most peers as investors become increasingly optimistic about his turnaround plans.<\/p>\n![\"hide](\"https:\/\/static-redesign.cnbcfm.com\/dist\/a54b41835a8b60db28c2.svg\")
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