How vulnerable are luxury brands to the Middle East conflict?
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People walk at Dubai Mall amid the U.S.-Israel conflict with Iran, in Dubai, United Arab Emirates, March 3, 2026. REUTERS/Raghed Waked
MILAN, March 3 (Reuters) - The crisis in the Middle East is adding pressure on the luxury sector, which is already struggling to emerge from a slowdown in demand, with groups such as Richemont and Zegna seen among the most exposed.
Israeli and U.S. attacks on Iran and Tehran's response forced the closure of airspace across parts of the Middle East and shut key airports such as Dubai and Doha, disrupting business and travel.
HOW BIG IS THE MIDDLE EAST LUXURY MARKET?
The Middle East accounts for roughly 5% to 6% of global luxury sales, according to estimates from Morgan Stanley and Bank of America, with most purchases driven by tourists, particularly from Russia, Saudi Arabia, China and India.
The United Arab Emirates represents about half the sector's regional revenues, with most transactions concentrated in Dubai, Morgan Stanley said.
As on Monday, many stores in Dubai and other major Middle Eastern shopping hubs were closed or operating with minimal staff.
WHY IT MATTERS
As luxury companies struggle to recover from a two-year slowdown, investors hope Middle East sales - a rare sector bright spot last year - can help revive the industry, as China's recovery remains weak and U.S. tariff risks add to uncertainty.
The crisis could also affect the so-called Ramadan rush - affluent Gulf residents travelling to shop in Europe and elsewhere during the month of Ramadan, analysts at Morgan Stanley said.
WHICH BRANDS ARE THE MOST EXPOSED?
Cartier-owner Richemont and Italy's Zegna are the most exposed, each deriving around 9% of total sales from the Middle East, while Burberry is among the least affected.
HOW ARE LUXURY COMPANIES PERFORMING ON THE STOCK MARKET?
The STOXX Europe Luxury 10 Index has fallen around 9% since Monday, the biggest two-day drop since the tariff shock in April.
(Reporting by Elisa Anzolin. Editing by Mark Potter)
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