LVMH sales hit as Middle East conflict delays luxury recovery

The conflict in the Middle East hit sales at LVMH in the first quarter, as shoppers and tourists in the region curbed their spending, denting hopes of a recovery this year for the global luxury sector.

First-quarter sales at the world’s largest luxury group rose 1 per cent on a like-for-like basis compared to a year ago, falling short of analysts’ expectations at €19.1 billion (US$22.46 billion; S$28.58 billion). The company said that the US and Israel’s war on Iran had hit its bellwether fashion and leather goods division, where sales fell 2 per cent to €9.24 billion — the seventh consecutive quarter of declines.

The conflict reduced group sales growth in March by 3 percentage points, as missile strikes on the Gulf including Dubai prompted shoppers to avoid the region’s malls. For the first quarter as a whole, it cost the group 1 percentage point in sales growth.

The results deal a blow to industry hopes that 2026 would mark a turning point after a protracted downturn, with the arrival of new creative directors expected to revitalise output at a number of major brands.

“We still see Middle East demand being down as of today,” said chief financial officer Cwcile Cabanis, who noted that sales in some malls fell by as much as 70 per cent in early March. “What we haven’t yet seen is repatriation, and we know this wealth hasn’t evaporated. So we would expect to see some of that [business] coming through elsewhere.”

Shares in LVMH, controlled by the family of French billionaire Bernard Arnault, have fallen nearly 25 per cent this year. The group’s US-listed securities fell about 4 per cent on Monday after it published first-quarter numbers, dragging other names in the luxury sector lower.

The direct impact on luxury spending from the war in the Middle East is expected to be moderate, with the region accounting for about 5 per cent of industry sales. But analysts have said the bigger risk is a drawn-out conflict that hurts consumer confidence around the world.

HSBC last month cut its forecast for luxury industry sales growth by 1.1 percentage points to 5.9 per cent in 2026, blaming weakness in Europe and the Middle East.

LVMH’s first-quarter sales in Europe and Japan fell 3 per cent in the quarter, as local demand failed to offset lower spending by tourists. But Cabanis said that the group had its best quarter in Asia outside Japan since 2023, with sales up 7 per cent year on year, suggesting the worst of a long luxury slump in China may be over.

US sales remained strong, up 3 per cent in the first quarter. Sales of watches and jewellery, notably at jewellers Tiffany and Bvlgari, also bucked a downbeat trend, rising 7 per cent.

Analysts hope that LVMH will benefit this year from the arrival of new designers such as Jonathan Anderson at Dior and Michael Rider at Celine.

“Macro headlines do not look rosy but renewed creativity and more attractive pricing should drive the improvement,” wrote Anne-Laure Bismuth at HSBC.

CFO Cabanis said on Monday (Apr 13) that the company was seeing a “good response” to products from new creative directors, particularly at Dior.

Adrienne Klasa © 2026 The Financial Times.

This article originally appeared in The Financial Times.