Luxury Brands See Profits Drop as Iran Conflict Hits UAE Mall Sales
Luxury retail in the United Arab Emirates suffered sharp declines in March after recent regional hostilities. Sales and footfall fell at major malls in Dubai and Abu Dhabi.
Mall performance in March
At the Mall of the Emirates, luxury store sales fell between 30% and 50% year-on-year in March. Footfall at that mall was down about 15% in the same month.
The larger Dubai Mall saw traffic decline by roughly 50% in March. Abu Dhabi’s Galleria recorded a milder drop, near 10% across stores.
Where the luxury shopping is concentrated
Mall of the Emirates hosts brands such as Louis Vuitton, Dior, Gucci, Cartier, Chanel and Rolex. The complex also includes an indoor ski slope and wellness facilities.
Sector context and financial impact
The global luxury sector is valued near $400 billion. It has contracted over the last three years after a 2022 boom ended.
Since that boom, the combined market value of LVMH and Kering fell by over 100 billion euros. That represents more than a quarter of their earlier combined value.
- Industry sales fell about 2% last year, according to Bain & Company.
- The Middle East accounts for roughly 5% of global luxury consumption.
- The region had been posting double-digit revenue growth until recently.
Profit risks and corporate reporting
Luxury brands are now facing a potential profits drop as regional instability reduces high-margin retail. Profits could be hit more than quarterly sales.
LVMH is scheduled to report first-quarter sales first. Gucci-owner Kering and Hermès will report later in the week. Kering will hold a capital markets day on Thursday.
Security incidents and recovery prospects
The latest escalation began after strikes on Iran on February 28. Iranian drone attacks have targeted Dubai’s airport and other infrastructure.
The Burj Al Arab sustained facade damage from debris after a drone interception. Recovery to normal retail activity is expected to take months.
Analysts warn the conflict’s ripple effects could raise oil and travel costs. They also caution about higher inflation and weaker shopper appetite abroad.
Why the Gulf mattered to luxury firms
Dubai offered very high sales per square metre for megabrands. Annual sales per square metre can reach several hundred thousand euros there.
Factors included low rents, lower labour costs, higher regional retail prices and minimal taxation. Those conditions made the UAE an unusually profitable market.
Mall operators and luxury groups did not provide comment on regional sales figures. Industry sources supplied the performance estimates for March.
