Summary

• Hermes faced a sharp Q1 2026 sales slowdown due to the Middle East conflict, triggering a double-digit stock drop and creating a compelling entry point.
• Despite a 6% revenue increase (entirely price-driven), volume growth was flat, and Middle East sales fell 6%, but profitability remained intact.
• HESAY’s valuation compressed from 51–52x to 38.3x P/E, offering robust 10–12% long-term return potential as fundamentals remain resilient.
• The market’s reaction appears overblown; long-term investors may find this a rare opportunity given Hermes’ historical resilience and premium business model.

Just when it seemed 2026 would finally be the year of recovery for luxury stocks, the Iran war started. Ever since early 2024, the demand for luxury products has witnessed a decline as shoppers pulled back on

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of HESAY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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