Luxury brands see stocks fall as Iran war clouds markets

Shares of top luxury brands slumped this week, with geopolitical tensions negatively impacting sales.

Kering, owner of Italian luxury brand Gucci, and French high-fashion label Hermes led the downward trend, with shares sinking over 9% and 8% respectively.

Weak sales showed the war in Iran was weighing on demand in the Middle ‌East and tourism in Europe, dealing a blow to hopes of a revival for the luxury goods sector, Reuters reports.

Motheo Khoaripe (in for Stephen Grootes) gets comment from Michael Zahariev, co-founder of Luxity, a marketplace for authenticated luxury fashion.

Zahariev attributes the pressure on the luxury goods market to a combination of multiple factors, not only the supply chain blocks caused by the conflict in the Middle East.

He recaps how the market was outperforming in the early 2000s coming out of the COVID pandemic, with growth stabilising and flattening somewhat in 2025.

"That was already driving a downward trend but having this Iran news is really weighing on the stock, including the fact that the Middle East is a very big segment for growth for many of the luxury brands."

"And of course we know that even if the war was to end today, there will be many pressures that continue to affect supply chain, travel and luxury expenditure down the line."

He also notes that as more of the traditional Western markets like the US and Europe were flattening, China had looked like "the next frontier" but that country's own economic problems put paid to this.

"To a certain extent I think there was hope that the Middle East and, in the much longer term, Africa could perhaps boost the market. So this conflict has really thrown a spanner in the works and created negative market sentiment."

Zahariev believes, however, that there is opportunity for a positive outlook down the line.

He refers again to the COVID period which showed some similar dynamics where there were disruptions to travel and to supply chains.

"And when we started coming out of that, the luxury industry was one of the markets that was quicker to pick up and really thrived... so there may be an opportunity there depending on how things settle, as especially wealthy consumers who are starved of travel will need to spend that money somewhere."

This possible future uptick to sales is something the markets might not be factoring in right now, he says.

Listen to Zahariev's insights into the future of the luxury market in the interview audio at the top of the article