LVMH chairman and chief executive officer Bernard Arnault during the presentation of its 2025 annual results in Paris in January.Benoit Tessier/Reuters
French luxury giant LVMH LVMUY said the Iran war shaved at least 1 per cent off its total group sales in the last quarter owing to lower spending in the Gulf region, and that fewer tourists in Europe added to the weakness.
The news from LVMH, the first large luxury company to report first-quarter sales, is likely to increase investors’ worries about the Gulf conflict’s impact on a nascent recovery in the US$400-billion luxury industry. LVMH’s U.S.-listed shares fell 3.75 per cent and Gucci owner Kering’s PPRUF shares were down 1.5 per cent.
Global quarterly sales at the owner of brands including Louis Vuitton and Dior, Bulgari jewellery and Hennessy, rose by 1 per cent when adjusted for currency swings, slightly below analyst estimates of a 1.5-per-cent rise, according to a Visible Alpha consensus.
The group’s finance chief Cécile Cabanis said the situation in the Middle East has not markedly improved since the heavy disruption seen in shopping hubs at the start of the war. “What we see today is still that demand is very much down.”
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Reuters reported that mall sales in Dubai fell by as much as 50 per cent since U.S.-Israeli attacks on Iran at the end of February began the latest conflict in the Middle East. Sales of luxury cars are also under threat.
Ms. Cabanis said mall traffic in a region representing 6 per cent of LVMH’s turnover had initially dropped by between 30 per cent and 70 per cent, citing 50 per cent as an average.
“What you have to take into account is that Middle East is quite a profitable market … If you lose one euro in sales, you probably lose a bit more in your margin,” she added.
The conflict also weighed on sales in Europe, which were down 3 per cent, because of the strong euro, as well as the conflict, LVMH said.
“We have already seen two or three years of [luxury sector] crisis,” said Laurent Chaudeurge, a member of the investment committee at Paris-based asset manager BDL.
“And just as we were hoping to get out of the crisis, it hits back with the Middle East.”
Most analysts still say 2026 will be a year of luxury growth, including for LVMH, after more than two years of stagnation. LVMH said most categories and regions, including China, had improved, discounting the impact of war.
Shares in the conglomerate, which is run and controlled by billionaire Bernard Arnault, have dropped by 26 per cent since the start of the year, making it one of Europe’s worst large-cap performers.
Sales at LVMH’s core leather and fashion division, which last year accounted for roughly 80 per cent of operating profits, were down by 2 per cent organically, below analyst estimates of a 1-per-cent decline.
It was the seventh straight quarter of declining revenues at the division.
The individual performance of flagship brands Louis Vuitton and Dior, which is undergoing a makeover under new designer Jonathan Anderson, was in line with the division as a whole, the company said.
Demand in the United States was the main bright spot. U.S. sales showed 3-per-cent organic growth, the company said, adding the war so far has not disrupted the spending mood there.
U.S. luxury spending constantly rose during the first quarter, according to credit-card data cited by Citi analysts, with people spending more on individual purchases.
Consumer sentiment in the United States, however, hit a record low in early April and consumers anticipate a surge in inflation in the next 12 months, according to a leading survey published on Friday.