LVMH Sales Growth Slows as Middle East Conflict Dampens Luxury Demand

LVMH shares declined in Paris trading after the luxury conglomerate revealed that geopolitical instability in the Middle East has hindered its sales momentum. The company reported organic growth of 1% for the quarter, falling short of the 1.5% growth projected by FactSet analysts. The shortfall is largely attributed to the conflict involving Iran, which LVMH CFO Cécile Cabanis noted had a 1% negative impact on overall group sales. In specific Middle East locations, demand plummeted between 30% and 70% during March, disrupting a recovery that had previously been hampered by soft demand from Chinese consumers. Regional performance remained mixed. While the U.S. market grew by 3% and Asia (excluding Japan) saw a 7% increase, Europe and Japan both experienced 3% declines in organic sales. The critical Fashion and Leather Goods division saw a 2% drop, though management indicated growth would have been flat without the Middle East disruption. Analysts have responded by lowering price targets. Bernstein reduced its target to 600 euros, while Jefferies cut its target significantly to 510 euros. Despite the volatility, some analysts maintain a positive long-term outlook, citing the resilience of American and Chinese spending and the company's creative revival efforts.