Dior's owner reported an increase in sales of clothing and handbags for the first time in two years

Sales at the largest and most profitable division of fashion giant LVMH have returned to growth after a two-year hiatus. Demand for Dior clothing and handbags has driven this growth following Jonathan Anderson’s appointment as creative director last year. However, instability in the Middle East—an important market for luxury goods manufacturers—continues to weigh on the business. LVMH’s stock has fallen 28% this year.

LVMH’s key division, which focuses on apparel and leather goods and includes the Louis Vuitton and Dior brands, reported a 1% increase in organic sales in the second quarter, reaching 8.9 billion euros ($10.1 billion). This division returned to growth for the first time in two years, Bloomberg notes. LVMH CEO Bernard Arnault cited the success of the first collections by Dior’s new creative director, Jonathan Anderson, as one of the drivers of growth. Dior’s sales outpaced the group’s overall growth rate, said the company’s CFO, Cécile Cabanne.

However, due to the war in the Middle East, the results fell short of analysts' forecasts. Analysts surveyed by the agency had expected the division's organic sales to grow by 1.52%.

LVMH's total sales in the second quarter rose 3% to 19.5 billion euros ($22.2 billion). According to a statement from the holding company, growth would have been 4% had it not been for the conflict in the Middle East.

Profit from operating activities for the first half of the year totaled 8.7 billion euros (about $9.9 billion), exceeding market expectations. The operating margin remained virtually unchanged from last year at 22.5%.

Following the release of the report, LVMH’s American Depositary Receipts fell 2% in New York trading. Trading in Paris had already closed by that time. Since the beginning of the year, LVMH shares traded in France have fallen 28%.

The war in the Middle East has had a negative impact on tourist traffic to Dubai—one of the region’s key hubs for luxury goods sales. Shortly after the conflict began, demand for the group’s products in the Middle East fell by 30–70%, depending on specific shopping centers and business segments, LVMH’s CFO reported earlier.

Against the backdrop of weak results in the apparel segment, the watches and jewelry division—which includes Tiffany & Co. and Bulgari—saw sales rise 11% in the second quarter, significantly outperforming forecasts. Rival Richemont showed a similar trend: its sales surged during the same period thanks to demand for Cartier and Van Cleef & Arpels jewelry, according to Bloomberg.

In addition, LVMH reported that in the second quarter, organic sales rose 6% in the U.S., 14% in Japan, and 4% in Asia. In Europe, however, growth was flat. The company attributed this to the rise in stock markets in the U.S. and Asia, driven by the artificial intelligence boom. “Where wealth is being created, there is demand for luxury goods,” said Kabani (as quoted by the Financial Times).

This article was AI-translated and verified by a human editor