The French luxury powerhouse LVMH announced Monday that ongoing Middle Eastern warfare has significantly damaged its business performance, with decreased spending in Gulf nations and reduced tourist purchases from that region across Europe.
The conglomerate behind Louis Vuitton, Dior, Bulgari jewelry, and Hennessy reported quarterly revenue growth of just 1% after currency adjustments, falling short of analyst predictions of 1.5% growth based on Visible Alpha consensus data.
Company officials stated the warfare created approximately 1% drag on overall group revenue, not including secondary effects like reduced tourism in other markets.
Dubai shopping center sales have plummeted up to 50% since hostilities began, Reuters previously reported. LVMH confirmed mall visitor numbers dropped dramatically, noting that while the Middle East accounts for 6% of company revenue, profit margin impacts will likely be more severe given the region’s exceptionally high profitability.
European sales also suffered, declining 3% primarily due to the conflict and a strengthened euro, according to company statements.
LVMH’s U.S.-traded stock price fell nearly 3% after the earnings announcement, pulling down competitor shares as well. Gucci parent company Kering saw its U.S. shares drop 4%.
This earnings report from the luxury sector leader highlights potential challenges facing the $400 billion global luxury market and may increase investor concerns about the Gulf conflict disrupting the industry’s emerging recovery.
LVMH became the first major luxury firm to release first-quarter sales figures. Kering and Hermes, maker of Birkin handbags, will report later this week.
“The luxury sector has endured two or three years of crisis already,” commented Laurent Chaudeurge, investment committee member at Paris-based BDL asset management. “Just when we thought we might escape the crisis, the Middle East situation strikes back.”
Despite current challenges, most industry experts still predict 2026 will bring luxury growth, including for LVMH, following more than two years of market stagnation. The company noted improvements across most product categories and geographic regions, including China, excluding war impacts that started with U.S.-Israeli strikes on Iran February 28.
Stock prices for the conglomerate, led and owned by billionaire Bernard Arnault, have fallen 26% year-to-date, ranking among Europe’s poorest large-cap stock performances.
The company’s primary fashion and leather goods segment, which generated roughly 80% of profits last year, posted 2% organic sales decline, about 1% better than the previous quarter but slightly worse than analyst expectations of 1% drop.
This marked the seventh consecutive quarter of revenue decreases for the division.
Flagship brands Louis Vuitton and Dior, currently undergoing redesign under new creative director Jonathan Anderson, performed similarly to the overall division, company representatives said.
United States demand provided the primary positive development. American sales grew 3% organically, with company officials noting the war hasn’t yet affected U.S. consumer spending patterns.
Credit card information referenced by Citi analysts showed consistent U.S. luxury spending increases during the first quarter, with consumers making larger individual purchases.
However, American consumer confidence reached record lows in early April, and shoppers expect significant inflation over the next year, according to a prominent survey released Friday.
