Hermes Q1 sales slow amid Middle East conflict, stock drops but long-term outlook remains strong

Hermes experienced a sharp sales slowdown in Q1 2026 due to the Middle East conflict, with sales volume flat and Middle East revenue down 6%, despite a 6% overall revenue increase driven by price hikes. The stock price dropped significantly, compressing its valuation from about 51-52x to 38.3x P/E, creating a potential buying opportunity. Profitability stayed solid, and the market reaction is seen as overblown, suggesting long-term investors could benefit from Hermes' resilient business model and premium positioning. The conflict's impact challenges luxury demand, but fundamentals remain robust for future growth.