LVMH Q1 sales miss expectations as luxury recovery is put on pause amid Middle East war

Luxury conglomerate and industry leader LVMH It reported quarterly sales on Monday met expectations as the industry began to understand the fallout from the war in the Middle East and its impact on stocks.

Organic sales rose 1% in the first quarter, but analysts surveyed by FactSet expected 1.5% growth in the March quarter.

Conflict in the Middle East had a 1% negative impact on organic growth in the quarter, LVMH said in a statement.

“LVMH maintained its strong innovative momentum and demonstrated good resilience in a disrupted and strengthened geopolitical and economic environment due to conflict in the Middle East,” the company said. he said and stated that he had a good start to the year in the USA.

The French company’s U.S.-listed shares fell 3.4% on Monday.

Analysts expect growth to pick up significantly in the coming quarters as LVMH and others continue to reinvent themselves and win back customers. Following the luxury boom, which ends in 2022 and saw significant price increases and strategic decisions that alienated segments of customers, many customers turned their backs on brands.

The development comes as the sector shows long-awaited signs of recovery after years of slump caused by weak demand from Chinese consumers, formerly one of the sector’s main growth drivers.

LVMH’s fashion and leather goods division, its largest unit, which includes brands such as Louis Vuitton, Dior and Fendi, fell 2% in constant currency to 9.2 billion euros ($10.8 billion) in the quarter. Total revenue was slightly below expectations at 19.1 billion euros.

Watches and jewelry grew 7% organically in the quarter, driven by Tiffany’s strong performance, and the company’s wine and spirits division grew 5%.

According to reports, LVMH sales fell 6% in the quarter due to the impact of unfavorable exchange rates.

LVMH said local demand helped partially offset reduced tourist spending. The company added that Asia, excluding Japan, saw strong growth, which “confirms the improvement in the trends observed from the second half of 2025.”

In 2025, the company’s organic sales fell by 1%, with growth concentrated in the second half of the year.

China’s recovery remains on investors’ minds in 2026; so is the impact of the war in the Middle East, which has been one of the industry’s few bright spots amid slow growth elsewhere.

While the region accounts for a relatively low percentage of most major luxury companies’ total sales (typically mid-single digits), stocks have fallen significantly since February 28, when the US and Israel first struck Iran. Global markets remain unstable due to the energy crisis that emerged with the effective closure of the Strait of Hormuz.

Beyond macroeconomic uncertainty, key risks for LVMH into the remainder of 2026 include its ability to maintain brand momentum around Louis Vuitton while gradually building out Dior, Givenchy and Celine, Barclays analyst Carole Madjo wrote in a note to clients in late March.

While Madjo forecast organic growth to rebound to 5% in the second quarter, he added that stabilizing the wine and spirits division, investing in cosmetics and maintaining Sephora’s solid performance will also be important.

“Increasing global uncertainty has led to concern among key investors, particularly among those anticipating a long-awaited rebound in luxury demand this year,” UBS analyst Zuzanna Pusz said in late March.

Pusz said consumer sectors generally underperform during periods of oil and energy-related shocks, and increasing geopolitical uncertainty is likely to weigh on sentiment in the near term.

Despite this, he added, there is still no sign of a slowdown in demand, especially in Asia. “In an environment of very negative market sentiment and depressed valuations, we think even modest successes in the first quarter could be disproportionately rewarded.”

Smaller luxury cashmere peer Brunello Cucinelli, the first major luxury brand to report this earnings season, saw its revenue rise 14% in constant currencies in the first quarter.

The Italian company exceeded expectations and increased its shares last week. The company noted that Asia and China in particular “see further improvement compared to the already positive trend of the fourth quarter of 2025, confirming the brand’s growing appreciation throughout the region and its position in the top luxury segment.”

peers hermes and owner of Gucci Kering They are also scheduled to report earnings this week.