The conflict in the Middle East weighed on LVMH’s first-quarter sales—consumers and tourists in the region cut back spending, weakening expectations for a recovery in the global luxury market this year.
Revenue at the world’s largest luxury group rose by just 1% on a like-for-like basis from a year earlier and fell short of analysts’ forecasts, coming in at €19.1 billion. The company said the US and Israeli war against Iran hit its core fashion and leather goods division—its sales fell 2% to €9.24 billion, marking a seventh consecutive quarter of decline.
The fighting cut the group’s revenue growth in March by 3 percentage points—missile strikes on Persian Gulf countries, including Dubai, led shoppers to stay away from malls. Across the quarter as a whole, the conflict was estimated to have reduced growth by 1 percentage point.
Those results undermine the industry’s hopes that 2026 would mark a turning point after a prolonged downturn—it had been expected that new creative directors would revive the biggest brands.
“We are still seeing weaker demand in the Middle East as of today,” finance director Cecile Cabanis said, adding that sales in some shopping malls were down by as much as 70% in early March. “What we have not yet seen is spending returning to other regions, although it is clear that this wealth has not disappeared. We expect some of that business to emerge elsewhere.”
Shares in LVMH, controlled by the family of French billionaire Bernard Arnault, are down about 25% since the start of the year. After the quarterly results were published on Tuesday, trading in Paris opened with the stock down nearly 3%, while shares in other European luxury companies were broadly stable.
The direct impact of the war on demand for luxury goods is seen as moderate—the region accounts for about 5% of the industry’s global sales. Analysts warn, however, that a prolonged conflict could pose a more serious risk by undermining consumer confidence worldwide.
Last month, HSBC cut its 2026 luxury-sector sales growth forecast by 1.1 percentage points—to 5.9%—citing weakness in Europe and the Middle East.
In Europe and Japan, LVMH sales fell 3% in the first quarter—local demand failed to offset weaker tourist spending. In Asia outside Japan, however, the company posted its best quarter since 2023, according to Cabanis, with year-on-year growth of 7%, which may point to the Chinese market gradually emerging from a prolonged slump.
In the US, sales remained resilient and rose 3% over the quarter. The watches and jewelry division, notably brands such as Tiffany and Bvlgari, also posted 7% growth despite the broader negative backdrop.
Analysts expect LVMH to draw support this year from the arrival of new designers—Jonathan Anderson at Dior and Michael Rider at Céline.
“The macroeconomic backdrop remains unfavorable, but the refreshed creative strategy and more attractive pricing should help improve performance,” said HSBC analyst Anne-Laure Bismuth.
Cabanis stressed that the company is already seeing a “good response” to collections by its new creative directors, especially at Dior.