Billionaire LVMH CEO Bernard Arnault on Thursday warned the Iran war could result in a “world catastrophe” if left unresolved, a rare comment from one of the world’s richest people on the conflict, as luxury brands have reported a slowdown in demand in recent weeks.
Luxury brands cited a slowdown in demand throughout the conflict, disrupting earnings.
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Arnault, who spoke Thursday during LVMH’s annual shareholder meeting in Paris, said the world is “now in a pretty serious crisis in the Middle East” and warned the Iran war could spiral into a “world catastrophe with very serious and very negative economic impact,” according to a translation by LVMH.
Should the conflict persist, Arnault said it would be impossible to predict the outcome, but noted a resolution would allow businesses to recover and “resume their normal course.”
LVMH last week reported the Middle East conflict had a 1% negative impact on organic growth through its latest quarter, citing a slowdown in tourist spending throughout Europe, and chief financial officer Cécile Cabanis said during an earnings call there has been an up to 70% decline in demand since the war began in late February.
Shares of LVMH, which trade at the Euronext Paris stock exchange, dropped slightly (0.2%) as of Thursday morning.
Nearly 15%. That’s how much LVMH’s shares declined by in March, adding to a 26% plunge on the year so far while reducing the luxury conglomerate’s market valuation to $228.8 billion from $268.9 billion.
Arnault, who was once the richest person in the world, is now the ninth-richest, with an estimated net worth of $149.2 billion as of Thursday.
Luxury bellwethers Kering—whose core brands include Gucci, Balenciaga and Saint Laurent, among others—and Hermès reported first-quarter earnings last week that disappointed investors as they cited waning tourist demand during the Iran war. Hermès reported its wholesale activity was “significantly” disrupted by lower sales to concession stores, especially in the Middle East and in airports. UBS analyst Zuzanna Pusz wrote last month that “elevated global uncertainty has generated significant investor anxiety,” particularly among those waiting for a “long-awaited recovery in luxury demand this year.”
Arnault’s comment on the Iran war is a rare insight into how the billionaire class views the conflict. Billionaire and former Qatari Prime Minister Hamad bin Jassim bin Jaber Al Thani warned last month that Iran’s attacks on Qatar’s energy infrastructure would only push the Middle East “toward the abyss of a mad war.” A two-week ceasefire, which was set to expire Wednesday, is likely to be extended after President Donald Trump said Tuesday he expected Iran to make a deal even as negotiations were called off.
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