Bernard Arnault’s empire has never suffered such damage in the entire history of the company. LVMH shares fell 28% in the first quarter of 2026, surpassing losses recorded during the 2008 global financial crisis, the 2020 COVID-19 pandemic and the 2001 dot-com crash. Bloomberg’s analysis, which goes back to 1989, found no previous quarter matching the severity of the decline.
The stock currently trades at less than 20 times expected earnings, a valuation level that would have been unthinkable just 18 months ago. Bernard Arnault’s personal wealth fell by about $55 billion in the quarter alone, the largest loss in a single quarter among the 500 wealthiest people tracked by the Bloomberg Billionaires Index.
The financial damage is concentrated in multiple channels simultaneously, which is why this recession is structurally different from past disruptions. The Middle East has been growing at a pace that offset a slowdown in China and mixed results in Europe. Although it accounted for about 6% of luxury sales for most major brands, its function as a growth engine outweighed its small share.
Dubai will become the fastest growing luxury retail hub globally by 2024 and 2025. Last year, 500 properties sold for more than $10 million, compared to just 30 in 2020. The halt in tourism, travel retail and high-net-worth spending across the Gulf has eliminated a single region that tells the story of the overall industry’s recovery.
UBS luxury analyst Zuzanna Pusz described investor sentiment in the sector as “the weakest in years” in a recent research note. “Increasing geopolitical uncertainty is likely to weigh on near-term earnings and delay long-awaited fundamental changes,” she added. Since the war began on February 28, the total market capitalization loss of LVMH, Hermes, Kering, and Richemont has amounted to approximately $100 billion.
Barclays predicted that LVMH could suffer the equivalent of three weeks of lost Middle Eastern tourist revenue during the conflict. Deutsche Bank characterized this sell-off as a ‘cyclical de-rating’ rather than a structural failure, and argued that valuations would quickly rebound as the macro outlook improves.
UBS further predicted a possible recovery of up to 40% of LVMH shares and up to 32% of Richemont shares once geopolitical uncertainty disappears. The ceasefire announced by President Trump on Tuesday night has tremendous significance in that context.
Once Iran confirms safe passage through the Strait of Hormuz, regional tourism will return to normal and Dubai’s travel retail corridors will reopen. Ferrari and Bentley have previously halted deliveries to the region due to security concerns. The resumption of these deliveries and the recovery in Gulf hotel occupancy will together constitute a meaningful second-half tailwind.
LVMH will announce its first quarter results on April 13th, Kering on April 14th, and Hermes on April 15th. For luxury investors, the ceasefire is not just a geopolitical relief exercise. This is potentially the catalyst the industry has been waiting for for five weeks.
