Hermes shares plunged even as the luxury handbag maker showed signs of recovery while rival Kering has seen its fortunes rebound.

Sales at Hermes rose 6.7 per cent to £3.5billion in the second quarter as consumers continued to splurge on its expensive bags and silk scarves despite uncertainty caused by the war in the Middle East.

But shares in the Birkin bag maker fell by 10 per cent on Wednesday morning as investors were disappointed not to see a stronger rebound in demand.

By contrast, Gucci owner Kering, which has been regarded as one of the worst-performing luxury fashion firms in recent years, saw shares rise 12.5 per cent. 

The group, which also owns Balenciaga and McQueen, returned to growth for the first time in three years as sales rose 2 per cent to £3.13billion in the second quarter.

The company said there had been a positive response in the US to new Gucci handbags, including the £1,950 Borsetto, which has been sported by Kate Moss.

It is a shot in the arm for boss Luca de Meo, who has been faced with a tough turnaround job since he joined from carmaker Renault last year.

Sales at flagship brand Gucci showed green shoots after years of failing to impress wealthy consumers. They fell 2 per cent in the second quarter, compared to an 8 per cent decline in the three months to March.

The latest update adds to hopes the luxury sector is beginning to recover after years in the doldrums. British label Burberry has also shown signs of better fortunes in recent months. Frasers’ billionaire Mike Ashley has even recently taken a 4 per cent stake in the trench-coat maker.

Hermes has been more resilient than its peers to major challenges plaguing the sector, such as weak demand for high-end goods in China, a key market, and weaker spending after a post-pandemic ‘revenge spending’ boom cooled off a few years ago.

But in recent months, it has been hit by the conflict in the Middle East, as wealthy tourists held off on spending in the conflict-hit region and across shopping destinations in Europe.

Sales in its Middle East region fell 2.4 per cent in the second quarter, showing a recovery on the 5.9 per cent decline in the first quarter.

Chief executive Axel Dumas said on Wednesday that tourist traffic in France had recovered, and there had been ‘improved momentum’ in its Paris stores.

But investors failed to be impressed on Wednesday – even though quarterly sales growth was better than the 5.6 per cent increase in the first three months of the year.

Sales in its key leather goods arm just missed analyst forecasts, growing 10 per cent in the quarter compared to a 10.8 per cent expectation.

Dumas also said there has not been a ‘tremendous improvement’ in China, one of luxury’s most important regions where a recovery has been eagerly anticipated.

Hermes’s exclusivity has helped to draw in rich customers as its more iconic products, such as the Birkin, cannot be bought new online and have a high resale value.

Angeline Ong, senior technical analyst at trading platform IG, said: ‘Normally, this is a script that runs the other way. Hermès is supposed to be the keeper of value, the brand you bet on when the world gets uncertain, because its customer base is so wealthy that a shaky economy barely touches their spending.’

But investors are concerned with ‘expectations, not fundamentals,’ and while Hermes’ investors were bitterly disappointed by the lack of a ‘comeback’, Kering has had ‘nowhere to go but up,’ she said.

Ong added: ‘Investors now have something to hang onto - evidence that chief executive Luca de Meo's turnaround, backed by debt-cutting, is actually starting to work although it is still early days.

‘So the flip isn't about which brand is stronger. It's about which one had further to climb versus further to fall from where the market had already priced it.’