Luxury Brands Seek New Markets as Gulf Sales Plunge Amid War

Luxury’s dependence on Gulf shoppers is looking far more fragile after war disrupted travel, cut airport traffic and weakened spending from Dubai to Europe. Hermès said sales in luxury malls in Dubai and other Gulf hubs dropped 40% in March, a sharp reversal in a market that had been one of the industry’s fastest-growing engines.

That strain landed just as the sector had been expecting a broad but manageable year. In November 2025, Bain & Company and Altagamma projected global luxury spending would be broadly flat in 2025 at about €1.44 trillion, with the personal luxury goods market forecast at €358 billion. The Middle East had been described as luxury’s brightest regional performer, but the war that began in late February 2026 has interrupted that momentum and exposed how much growth had been tied to wealthy travelers from the Persian Gulf.

The hit is showing up in the numbers from the biggest groups. LVMH said on April 13 that the conflict shaved at least 1% off group sales in the first quarter, even as organic revenue rose 1% to €19.1 billion, below expectations. Hermès reported first-quarter revenue of €4.1 billion on April 15, up 6% at constant exchange rates but down 1% at current rates because of currency swings. Its Middle East region, classified as “Other,” fell 6% to €160 million from €185 million a year earlier. Hermès chief financial officer Eric du Halgouet said wholesale activity was also hit, especially in concession stores in the Middle East and in airports. The company added that France’s sales were hurt by slower tourist flows linked to the situation in the Middle East.

Kering also felt the pressure, reporting an 8% drop in Gucci sales in the first quarter as the war hurt Middle East shoppers and curtailed international travel. Duty-free and airport retail operators such as DFS and Avolta were also squeezed as airport closures and reduced travel slowed one of luxury’s most reliable channels. For brands that had leaned on Gulf consumers to offset weakness in China and Europe, the war has turned a dependable growth story into a stress test.