LVMH Reports 1% Organic Sales Growth in Q1 2026

LVMH's organic sales grew 1% in the first quarter, with the Middle East conflict delivering a negative impact that effectively halved the company's growth. The Iran war weighed on demand during those three months, according to the luxury conglomerate. LVMH's CEO addressed shareholders at the company's Annual General Meeting in Paris on Thursday.

The CEO warned of a world catastrophe if the conflict in the Middle East is not resolved. He stated that the world is now in a pretty serious crisis in the Middle East. "Either it will be a world catastrophe with very serious and very negative economic impact in which case who can say how 2026 will unfold or it will be resolved more rapidly in some shape or form that we all hope for even if it doesn't seem to be easy in which case business will recover and resume their normal course," the CEO said.

LVMH reported the Middle East conflict's impact last week. A ceasefire is currently in place in the Middle East conflict. Iran and other parties are using the Strait of Hormuz as a bargaining chip in the conflict.

Around a fifth of global oil normally comes through the Strait of Hormuz. The effective closure of the Strait of Hormuz has led to the biggest energy security threat in history, the head of the International Energy Agency stated.

South Korea's Hyundai Motor warned of growing business uncertainty due to the Middle East conflict. The company cited the conflict as a factor in its reduced profits. Kering's retail revenue in the Middle East declined by 11% in the first quarter.

Kering has 79 stores in the Middle East.

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.