LVMH maintains growth despite Middle East disruption
LVMH has delivered a modest rise in quarterly sales, showing resilience despite disruption in the Middle East and softer tourism flows. The luxury group reports underlying strength across key markets, with most regions and categories showing improvement.
One of the first comments on the business effects of the war in the Gulf has come from French luxury giant LVMH, which says it suffered at least 1% lower total group sales in the past quarter due to lower spending in the region.
The curbing of travel had also seen fewer tourists in Europe, which added to the weakness.
Sales growth falls short of expectations
When adjusted for currency movements, LVMH sales in the latest quarter rose by 1% to €19.1 billion, slightly below analyst estimates of a 1.5% rise. The company’s statement implies that they would have beaten estimates without the hostilities in the Middle East.
Mixed performance in wines and spirits
The hard-pressed Moet Hennessy wines and spirits division achieved organic growth of 5% but in comparative terms fell by 2% from last year’s level.
LVMH said its champagnes had had “a good start to the year”, especially in Europe, and that Cognac had been helped by this year’s phasing of the Chinese New Year.
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Sharp drop in Middle East retail activity
Finance head Cecile 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.”
Reuters had reported that mall sales in Dubai fell by as much as 50% since the US-Israeli attacks on Iran at the end of February began the latest conflict in the Middle East.
Cabanis said mall traffic in a region representing 6% of LVMH’s turnover had initially dropped by between 30% and 70%, citing 50% as an average.
“What you have to take into account is that the Middle East is quite a profitable market. If you lose 1 euro in sales, you probably lose a bit more in your margin,” she added.
Outlook remains cautiously positive
Most analysts still believe 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 have slumped by a quarter since the start of the year.
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