LVMH stock drops as luxury recovery ‘party postponed’ amid Iran war
A sign on the exterior of a luxury Louis Vuitton boutique operated by LVMH Moet Hennessy Louis SE is seen on January 25, 2024 in Paris, France.
Benoît Tessier | Reuters
shares LVMH It fell on Tuesday after seeing a hit in sales due to the Iran war, overshadowing fundamental improvements.
The luxury conglomerate missed sales expectations with organic growth of 1% in the quarter, missing FactSet estimates of 1.5%.
LVMH also flagged a 1% negative impact from the Iran war in the quarter.
“When the conflict started and in March, there was a deficit and deterioration in demand of between 30% and 70%, depending on shopping malls and businesses,” LVMH CFO Cécile Cabanis said on a call with analysts late Monday, referring to the Middle East region, which accounts for about 6% of group sales. he said.
Cabanis said “anyone can guess” what the outcome of the conflict will be. “What we haven’t seen yet is repatriation, and what we do know is that wealth hasn’t evaporated, so if the conflict continues there will be a time when we will probably see that coming elsewhere and mitigate the impact.”
“The party is postponed,” Berstein analyst Luca Solca said in a note. The luxury industry was starting to show signs of recovery after years of slump caused by weak demand from Chinese consumers, formerly one of the industry’s main growth drivers.
Even if results are better than a year ago, “that’s probably not enough to convince investors to get off the fence,” Solca said. Overall organic sales decreased by 3% in the first quarter of 2025.
LVMH shares fell 0.7% in morning trading in Paris, for a year-to-date loss of 27%. Pan-European blue chip Stoxx 600 index It rose 0.7 percent amid hopes that U.S.-Iran peace talks could resume following the U.S. blockade of the Strait of Hormuz.
LVMH has been splitting its shares year-to-date.
“The most important nations that support luxury goods spending (the Chinese and Americans) are improving and remaining strong,” Solca told CNBC’s “Europe Early Edition” on Tuesday.
Organic sales fell 3% in Europe and Japan, respectively, this quarter, while sales in the U.S. rose 3%. Asia, excluding Japan, grew by 7%.
Predictions cut
Following the report, many analysts lowered their price targets for LVMH shares. Solca lowered its target to 600 euros ($707) from 685 euros and maintained its Outperform rating because the company is “improving where it matters.”
Sales in the fashion and leather goods division, which generates the bulk of the company’s profits, fell 2%. CFO Cabanis said the division would have seen “flat” growth if not for the conflict in the Middle East.
LVMH management underlined the momentum for major brands Louis Vuitton and Dior, highlighting progress on “innovation” and creative revival, including the appointment of Jonathan Anderson as Dior’s creative director last year.
“LVMH’s slight miss on Fashion&Leather will likely set a cautious tone for the reporting season,” Citi analysts said, while reiterating their share price target of 621 euros, up from 664 euros in March.
“The main uncertainty is the impact of the conflict in the Middle East on macro conditions, consumer confidence and global tourist flows,” they said, but they remain positive on the stock in a sector that is still not bullish.
Jefferies analysts cut their price target to 510 euros from 610 euros, saying the company’s gradual progress was overshadowed by dilution in the Middle East.
