Sales at top European luxury brands have sharply declined in the UAE, as the ongoing Iran conflict disrupts one of the industry’s fastest-growing markets, according to a Reuters report.
Luxury retailers recorded sales drops of 30–50% in March at Mall of the Emirates compared to the same period last year, Reuters reported. Footfall at the mall — which houses flagship stores from LVMH brands such as Louis Vuitton and Dior, Kering’s Gucci, and other labels like Cartier, Chanel and Rolex — fell by about 15%.
Similarly, the traffic at Dubai Mall, a major tourist hub, dropped even more steeply, declining by around 50%, suggesting a deeper hit to sales. In Abu Dhabi, the impact was less severe but still notable, with sales at The Galleria Al Maryah Island down roughly 10%, according to the report.
The downturn comes as leading luxury groups including LVMH, Kering and Hermès prepare to report quarterly earnings this week.
The broader luxury sector, valued at around $400 billion, has already been under pressure since a post-pandemic boom ended in 2022. While global sales declined by 2% last year, the Gulf region had remained a rare bright spot, contributing about 5% of global luxury consumption and posting strong growth.
“It was definitely a strategic region. Everything was okay,” said Carole Madjo, head of luxury research at Barclays, quoted by Reuters.
Analysts warn that even if the conflict eases soon, recovery will take time and could delay any expected rebound in luxury demand.
Bernstein analysts noted that the conflict’s ripple effects — including higher oil and travel costs, inflation, and potential market volatility — could dampen consumer appetite beyond the Gulf, particularly in the United States.
“If it now turns out that whatever luxury recovery we were hoping for in 2026 is not going to happen, and it’s going to be postponed at best into the second half or into next year, I don’t think anybody can be surprised by it,” Reuters quoted Christopher Rossbach, portfolio manager at J Stern & Co in London, to have said
While the Middle East’s relatively small share of global luxury sales may limit the immediate impact on quarterly revenues, analysts say profitability could take a larger hit. Dubai, with its low taxes, relatively low operating costs, and high retail prices, remains one of the most lucrative markets globally, with some flagship stores generating sales per square metre far above the global average.
