Commodities
Two Blockades
Who Controls the Strait of Hormuz Right Now and Why It Matters
4/14/2026
4/15/2026
This was a sad week for French luxury. LVMH, Gucci-parent Kering, and Hermès all reported earnings against the same backdrop: the Iran war, global oil shock, and disrupted travel. Shares plummeted, with Hermès leading the losses.
Luxury spending is discretionary, meaning the money is spent on “wants” not “needs.” Consumer confidence drops fast when energy costs surge, threatening to push inflation up globally.
The Middle East was the fastest-growing luxury market in 2025. Losing this bright spot would be a huge blow to the £400 billion sector that has been shrinking for two years in a row.
Luxury is unusually exposed to travel. A big chunk of sales happens when people are abroad, relaxed, and ready to spend.
The war hits multiple weak points:
LVMH said the Iran war shaved at least one percentage point off group sales in the quarter. Demand dropped sharply in the Gulf, and fewer Middle Eastern tourists spent in Europe.
The world’s most valuable luxury group is the home to Louis Vuitton bags, Dom Pérignon champagne, and Tiffany jewelry, among many other brands.
Mall sales in Dubai reportedly fell as much as 50%, even though the war covered only one month of the quarter. The US was a growth driver, but that may not last as the consumer sentiment just hit a record low in April.
Kering’s Gucci continued to struggle, marking the 11th consecutive quarter of falling sales.
Like LVMH, Kering flagged the Iran war and travel disruption weighing on Middle Eastern demand. Other regions outside North America also stayed soft, suggesting the slowdown is broad.
Kering’s fresh CEO Luca de Meo is due to release his turnaround plan. He faces an uphill battle, with Kering stock diving 9% in Paris on Wednesday.
Hermès has been luxury’s stalwart overperformer for a decade, with shares gaining five-fold since 2016.
The carefully orchestrated strategy of exclusivity and controlled craftsmanship has served it well. But even a Birkin bag may feel less of a priority when the news is full of missiles, naval blockades, and drone attacks.
Sales growth slowed and missed expectations. Hermès's amazing run in the stock markets comes with higher expectations. This may partially explain why the shares fell as much as 13%, ending the day 8% lower.