Hermès 1H26 revenue met expectations, with margins outperforming market expectations

Overview

This report is Bernstein’s review of Hermes International’s 2Q26/1H26 results. Group organic sales growth was 6.7% in 2Q26, in line with market consensus expectations and slightly faster than in 1Q26; EBIT margin reached 41.1%, 70 bps above expectations. The report believes that after Hermès’ recent valuation derating, this modest improvement should not be overinterpreted, but premiumization and accelerating new products may still provide future catalysts.

Core views

The core view is that Hermès’ top line was broadly in line with expectations, while margins were stronger, and its fundamental resilience remains better than that of most luxury companies. At the segment level, leather goods still delivered double-digit growth, while silk and textiles and watches performed better than expected; the perfumes business was materially weaker than expected. Regionally, Japan, the Americas, and France were strong, while APAC ex. JP was below consensus expectations. Bernstein maintains its Outperform rating with a EUR2,150 target price.

Analysis framework

The report primarily uses comparisons of actual results versus market consensus expectations, year-over-year and sequential growth decomposition, and organic growth analysis by region and business segment, combined with FX impact, gross margin, and EBIT margin changes to assess the company’s short-term operating quality. For valuation, Bernstein uses a relative P/E method, setting Hermès’ target valuation at 3.2x MSCI Europe on a relative P/E basis and applying it to a blended NTM+1 forward EPS forecast.

Methodology notes

• Valuation MethodRelative P/E Valuation

  Target relative P/E multiple

  Bernstein applies Hermès’ 3.2x P/E multiple relative to MSCI Europe to a blended NTM+1 forward EPS forecast to derive the EUR2,150 target price.

• Earnings AnalysisActual vs. Consensus Comparison

  Organic growth and margin variance

  The report compares 2Q26/1H26 sales, segment growth, regional growth, and EBIT margin with market consensus expectations to judge whether results beat or missed expectations.

• Rating FrameworkBernstein Equity Rating

  Outperform

  Bernstein’s Outperform indicates that the stock is expected to outperform the relevant market index by more than 15 percentage points over the next 12 months.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hermes International (RMS.FP)

  Core covered name

  Strengths

  Strong high-end brand positioning, double-digit growth in leather goods, margins above expectations, and meaningful implied upside to the target price.

  Weaknesses

  APAC ex. JP growth was below expectations, the Perfumes business declined materially, and FX weighed on revenue.

  Comparison

  Versus market consensus expectations, group organic sales were broadly flat while EBIT margin was stronger; versus 1Q26, 2Q26 organic growth improved slightly.

  Risks

  Insufficient innovation, animal welfare controversies stemming from reliance on exotic leather, legal challenges to commercial policies, FX volatility, and slowing regional demand.

Key data

• 2Q26 group organic sales growth6.7%Broadly in line with consensus expectations of 6.7%, and improved by 110 bps from 5.6% in 1Q26.
• 2Q26 total salesEUR4,094mAbout 1% above consensus expectations of EUR4,068m.
• EBIT margin41.1%70 bps above expectations, mainly driven by a higher gross margin.
• Leather Goods - Saddlery organic growth10.2%Slightly below consensus expectations of 10.8%.
• Silk and Textiles organic growth12.2%Significantly above consensus expectations of 7.4%.
• Perfumes organic growth-9.5%Weaker than consensus expectations of -2.9%.
• Americas organic growth13.7%Broadly close to consensus expectations of 14.1%.
• Japan organic growth12.3%Above consensus expectations of 10.6%.
• APAC ex. JP organic growth2.5%Below consensus expectations of 3.3%.
• FX impact2Q26 about -EUR70m; 1H26 about -EUR360mFX was about a -1.9 percentage point drag on growth in 2Q26.
• Target priceEUR2,150.00Equivalent to implied upside of about 27% versus the closing price of EUR1,695.50.

Impact & implications

The investment implication is that Hermès continues to demonstrate strong brand resilience and margin quality against a backdrop of pressured demand in the luxury sector. Revenue in line with expectations means limited near-term surprise, but the EBIT margin beat, continued growth in leather goods and certain categories, as well as premiumization and accelerating new products, support Bernstein’s positive rating. Areas to watch include weaker APAC ex. JP growth, the decline in perfumes, and the continuing FX headwind.

Risks

• If Hermès cannot continue to innovate convincingly, it could be pushed into an overly 'classic' corner as aesthetic trends shift away from quiet luxury.
• The company’s reliance on exotic leather could once again become a focal point of controversy as consumers pay more attention to animal welfare.
• If legal challenges succeed, Hermès’ commercial policies may need to be adjusted, and handbag prices may need to rise, potentially affecting growth in other product categories.
• FX volatility has already had a negative impact on 2Q26 and 1H26 revenue and may continue to weigh on reported performance.
• APAC ex. JP growth was below consensus expectations, indicating that demand in some key regions still needs monitoring.

What to watch

• Management guidance on demand trends, gross margin, and FX impact in the upcoming conference call.
• Whether Leather Goods can sustain double-digit growth, and whether new products and premiumization strategies can continue to drive demand.
• Whether regional growth divergence among APAC ex. JP, Japan, the Americas, and Europe widens.
• Whether the decline in Perfumes is a short-term fluctuation or reflects competitiveness issues in the category.
• Whether second-hand prices and scarcity of high-end products continue to support the brand’s pricing power.