LVMH, the French luxury giant, reported a 1% decline in quarterly sales on Monday, attributing part of the impact to the ongoing war in Iran and its effect on Middle Eastern markets. The conflict led to a negative impact of around 1% on total group sales, with significant drops in mall traffic and tourist spending.
Key Takeaways
LVMH reported a 1% decline in quarterly sales, attributing it partly to the impact of the Iran war. Sales fell significantly in Dubai and Abu Dhabi, with luxury brands experiencing drops ranging from 30-50%. The conflict has also affected tourist spending in Europe.
- LVMH's global sales rose by 1%, slightly below analyst estimates
- Mall traffic in Dubai dropped sharply due to the Middle East war
- Luxury industry faces another challenging year following two years of stagnation
- U.S. luxury spending remained strong, showing a 3% organic growth
Sales at luxury brands in Dubai's Mall of the Emirates fell by as much as 50%, according to Reuters. Footfall at the larger Dubai Mall was down about 50%, indicating a potentially even larger sales drop. In Abu Dhabi, March sales at the Galleria mall were more resilient but still down about 10% across the board.
The luxury industry, valued at $400 billion, has been struggling with stagnation for over two years. The Middle East had been one of the sector's rare bright spots, reporting double-digit annual revenue growth in recent years. However, the conflict has shaken Dubai's image of glamour and stability.
Despite the challenges, demand in the United States remained strong, with U.S. sales showing 3% organic growth. Analysts still predict that 2026 will be a year of luxury growth after over two years of stagnation. LVMH's shares have dropped by 26% since the start of the year, making it one of Europe's worst large-cap performers.
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