Hermes International (HMI) Q2 2026 Earnings Report

The call presented a predominantly positive operating and financial performance: resilient top-line growth with Q2 acceleration, an exceptionally high operating margin (41%), strong cash conversion and a robust balance sheet, alongside ongoing investments in production capacity and retail. Key challenges are material: significant FX and hedging headwinds that reduced reported growth (~EUR 360m / -4.5pp), a disappointing perfume/travel retail performance, stabilization but no clear rebound in Greater China demand, geopolitical-related softness in the Middle East, and a higher exceptional tax burden. On balance, operational strength (desirability of product, margin, cash generation, and disciplined investment) outweighs the downside impacts highlighted by management.

Hermès kept its outlook unchanged and reiterated a medium‑term objective of ambitious revenue growth at constant exchange rates while flagging stepped‑up investment and capacity expansion: H1 revenue was €8.2bn (+6% at CER; Q2 €4.1bn, +7% CER), operating margin remained very high at 41%, gross margin rose to 71.1% (+0.4pp), adjusted available cash flow was €2.2bn (up 18%) and cash flow €2.7bn (up 16%); management expects H1 operating investments of €344m (≈€75m for production) to accelerate, with full‑year operating investments guided to ~€1.0bn. They noted a negative FX impact of ~€360m (‑4.5pp to growth) and hedging costs close to €100m (≈‑1.2pp), reported restated net cash of €12.9bn (equity €19bn; cash ≈50% of equity), paid €1.9bn of dividends and repurchased 95,000 shares, and confirmed plans to open new stores (e.g., Chicago, Brooklyn, Chengdu, Geneva, Brazil), add roughly one leather workshop per year through 2030 and continue hiring (600 hires in H1, >300 in France) while maintaining a focus on quality.