LVMH Reports 1% Organic Sales Growth in Q1 2026

The conflict impacted Hermes' sales, with the company noting subdued activity in the region. Smaller peers flagged sales declines partly due to the conflict. The Middle East conflict hit sales in March for many luxury companies, weighing on quarterly earnings.

Luxury stocks came under pressure after the conflict negatively impacted sales. The conflict arrives at a precarious time for the luxury sector, which had anticipated a return to growth in 2026 after a year-long slump. For many big luxury companies, the Middle East accounts for mid-single-digits of total sales, with higher profitability in the region.

Brands face reduced traffic in the region due to the conflict. McKinsey Senior Partner Gemma D'Auria noted a double whammy of declining consumer sentiment, traffic, and spend in the Middle East. D'Auria described a two-speed recovery in luxury, with elite brands thriving while mid-market players lag.

LVMH saw improvement with Chinese consumers, but peers like Kering did not yet for brands such as Gucci. Hermes experienced sequential slowdown in Asia excluding Japan. The CEO emphasized the company's aspiration to move further into the luxury jewelry business, which has held up better amid the sector's slump.

A Morningstar analyst indicated a broad luxury recovery remains on track but at a fairly soft and uneven pace. The luxury sector had begun showing signs of recovery after a slump prompted by soft demand from Chinese consumers.

Real estate prices under pressure in China keep market confidence subdued. The Middle East was a growth hot spot before the conflict disrupted activity.