Major luxury stocks have dropped sharply since the Iran war began, and analysts say sales in the Middle East could fall by half.
According to the source, shares of LVMH are down roughly 16% this month and Hermès is down about 20%. Ferrari has fallen 15% and said it would temporarily suspend deliveries to the Middle East. Bentley, Maserati, and other high-end carmakers are also halting deliveries because of security risks and logistics.
Middle East growth had become important
The source says the conflict has exposed how important the Middle East has become to the luxury industry. Bernstein analyst Luca Solca said the region was the fastest-growing luxury market in the world last year, with growth of 6% to 8%, compared with flat growth globally.
The Middle East now accounts for about 6% of global luxury sales, according to Solca. He said that puts it on a path to potentially rival Japan, which accounts for about 9%.
Research from Morgan Stanley said Dubai has been the biggest driver of that expansion. The city accounts for about 80% of the UAE’s rise, and the UAE makes up more than half of luxury growth across the region.
Pressure comes during a hoped-for recovery
The source says the industry had been looking for a recovery in 2026 after two years of stagnant sales. It also says China was showing slight improvement, the U.S. luxury consumer remained strong, and Europe was steady with support from tourism spending.