Luxury’s hoped-for rebound has hit a snag. LVMH has reported a weaker start to 2026, as conflict in the Middle East dents demand and unsettles one of the industry’s most important customer bases.
First-quarter revenue came in at €19.1 billion, down 6% year-on-year. The group’s core fashion and leather goods division — home to Louis Vuitton and Dior — slipped again, marking its seventh consecutive quarter of decline.
Shoppers in major retail hubs such as Dubai pulled back as regional tensions escalated, with some malls reporting steep drops in footfall and spending during peak periods.
The Middle East, while a relatively small slice of LVMH’s global business, had an outsized impact. Sales momentum in the region reversed quickly after a strong start to the year, shaving around one percentage point off overall growth.
The slowdown has also rattled investor confidence, with shares posting their worst start to a year on record and dragging the wider luxury sector with them.
Elsewhere, the picture is more stable. The US delivered modest growth, while Asia (led by China) performed better than expected, helped by a solid Chinese New Year shopping season. Beauty chain Sephora showed improving trends, pointing to selective pockets of demand even as the broader market cools.
At the highest end, spending remains more resilient. Loro Piana stood out with double-digit growth, reinforcing a clear divide: ultra-wealthy consumers are still spending, while aspirational buyers are pulling back. Watches and jewellery also held up better than expected, offering some balance to declines in other categories.
LVMH is pressing ahead with retail expansion, including in the UK, while reshaping parts of its duty-free business and tightening its portfolio. The strategy is steady, but the backdrop is not. With no clear return yet of Middle Eastern spending and global uncertainty still in play, the luxury sector’s recovery looks uneven and far from guaranteed.
