Recovery prospects for French luxury giant LVMH depend heavily on how the ongoing crisis in the Middle East unfolds, CEO and controlling shareholder Bernard Arnault said on Thursday.
Speaking at the company’s annual shareholder meeting in Paris, Arnault highlighted the severity of the geopolitical situation and its implications for global markets.
“You will have noticed that the world is now in a very serious crisis in the Middle East,” Arnault said, as reported by Reuters.
He added, “It all depends on how this crisis unfolds.”
Ongoing tensions weigh on luxury sector recovery
The remarks come at a time when the luxury sector has been struggling to regain momentum after nearly three years of stagnation.
The ongoing conflict has dampened expectations for a near-term recovery, raising concerns among LVMH shareholders about another volatile year ahead.
Earlier this month, LVMH indicated that the Iran-related conflict had already begun to impact its business performance.
The company said the situation shaved at least 1% off its total group sales in the first quarter, as cited in a Reuters report.
It also disrupted tourist flows to Europe, a key driver of demand for luxury goods.
Tourism plays a crucial role in LVMH’s revenue, particularly in flagship markets such as Paris and other major European cities.
Any prolonged geopolitical instability tends to deter international travel, which in turn affects high-end retail spending.
Growth dependent on swift resolution
Arnault told shareholders that LVMH could return to growth across its divisions if the conflict is resolved quickly.
However, he also cautioned against the risks of escalation.
His comments underline the uncertainty facing not only LVMH but the broader luxury industry, which is closely tied to global economic stability and consumer confidence.
The status of a two-week-old ceasefire remained unclear as of Thursday, adding to the uncertainty.
Tensions escalated further after Iran tightened its grip on the strategic Strait of Hormuz, following an announcement by US President Donald Trump that attacks would be called off indefinitely, with no immediate signs of peace talks resuming.
Market performance reflects uncertainty
Investor sentiment around LVMH has weakened significantly amid these developments.
Shares in the company, the world’s largest luxury group by sales, have fallen sharply this year.
LVMH stock is down 26% since the beginning of the year and is also 3% lower compared to its level at the time of the company’s last shareholder meeting a year ago.
The decline reflects broader concerns about slowing demand, geopolitical risks, and the delayed recovery of the luxury sector.
Analysts and investors are now closely watching developments in the Middle East, as any resolution or further escalation could have a direct impact on LVMH’s performance in the coming quarters.
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