Economy
Middle East war takes toll on luxury brands, airport shopping
The Middle East war has hurt the sales of some of the world’s largest luxury groups, while also denting the sales at air hubs in the region, financial data shows.
From Hermes to Gucci and duty-free stores, the impact of conflict is seen on the sheets of the sector, which has already been facing a slower demand in recent quarters.
French luxury group Hermes reported weaker-than-expected first-quarter sales on Wednesday as the Iran war hit spending in the Middle East as well as in France, with fewer tourists visiting Paris and buying designer items.
Sales of products including Birkin and Kelly bags, silk scarves and perfume rose by 5.6% in currency-adjusted terms, but lower than a Visible Alpha analyst consensus of 7.1% growth.
Currency fluctuations took 290 million euros ($342 million) off Hermes’ revenue, leading to a 1% drop in reported sales to 4.07 billion euros, from 4.13 billion euros a year ago.
Hermes, which caters to the ultra-wealthy with handbags starting at $13,000, said weaker tourist flows had hit sales in concession stores at airports and in the Middle East, as well as in France, Britain, Italy and Switzerland, where Gulf shoppers are a key driver.
Investors’ hopes for luxury demand to recover this year have been dashed by the Iran war, which has dented Dubai mall sales and sent energy prices soaring, hitting consumer confidence.
Gucci sales also down
Similarly, sales at Kering’s Italian flagship brand Gucci dropped by 8% in the first quarter from the previous year, the fashion group said on Tuesday, with the decline also tied to the curtailed shopping due to the conflict in the Middle East and disruptions in international travel.
Gucci’s 1.35 billion euro sales from January to March were slightly below analyst forecasts, with the drop marking the 11th straight quarterly decline.
A Visible Alpha analyst consensus for revenues had projected around 1.37 billion euros.
The result, days before Kering CEO Luca de Meo is due to unveil his strategic plan to turn around the group’s fortunes, serves as a reminder of the steep challenge ahead for the storied fashion house and its controlling shareholder, the French Pinault family. Kering called the quarterly outcome a “first step” in its recovery.
Investors are pinning hopes on de Meo’s ability to find a recipe for success amid a jittery market and rapidly shifting trends, though most analysts expect Gucci to only return to growth in the second half of the year.
Still, Kering’s shares are down about 8% this year.
Impact seen at duty-free stores
From DFS to Avolta, duty-free stores selling premium perfumes and spirits to big spenders are also feeling the pinch as conflict in the Middle East shuts airports and curbs travel to the region – a setback likely to become more acute if the war drags on.
The disruption, now in its sixth week, exposes a vulnerability for luxury and beauty groups that have relied on airport shopping and Gulf hubs – among their highest-margin channels – to offset weaker demand in China and Europe, making even short-term airport closure a potential drag on quarterly profit.
Analysts have said a prolonged slump in Middle East air traffic could compound pressure on a travel-retail industry still recovering from the COVID-19 pandemic, squeezing underperforming businesses such as LVMH’s DFS and weighing on prestige beauty and luxury firms including Estee Lauder, Puig and L’Oreal.
International flights to and from the Middle East plummeted in the first half of March. While some airlines in the United Arab Emirates are slowly restarting, flights remain well below normal levels.
Flight cancellations from the Middle East, excluding Türkiye, decreased from their peak of 65% on March 3 to 13% on March 27, according to data from Cirium, but the number of flights scheduled has also fallen.
DFS “is costing two (percentage) points of growth” for its selective retailing division, which includes beauty brand Sephora, LVMH Chief Financial Officer Cecile Cabanis told analysts this week.
The conflict shaved at least 1% off group sales in the latest quarter due to lower spending in the Gulf region, LVMH said.
“What we see today is still that demand is very much down,” Cabanis said.
Gulf hubs suffer
Companies that operate in the $74 billion travel-retail industry have been shifting inventories and temporarily closing airport stores in the region. Normalcy for luxury airport shops may take time, analysts said.
Dubai International Airport, whose retail outlets include L’Oreal’s Aesop, Kering’s Gucci and Estee’s Jo Malone, is operating a reduced number of terminals after a drone attack forced the hub to temporarily close.
Kuwait International Airport has been shut due to repeated drone strikes, halting sales for airport outlets owned by Avolta and Boots.
Avolta, which earns 3% of revenue from the Middle East, is moving inventory from locations with slower sales to those with more foot traffic, CFO Yves Gerster told Reuters. Still, partly shuttered airports in some instances were leading to strong sales of food and other items for stranded travelers, for instance, at Dubai airport, Gerster said.
Kering CFO Armelle Poulou told Reuters after the company’s first-quarter earnings report that travel retail was slightly down compared with last year, and that “performance with local customers has been more resilient than tourism-related demand.”
The conflict shaved 3% off overall Kering sales in March, or 1% for the quarter, with a similar effect at Gucci in particular, Poulou said.
Investors will keenly watch out for Estee’s quarterly results on May 1, as the firm explores a $40 billion acquisition of Spanish competitor Puig, which derives a tenth of sales from travel retail. That makes it one of the more exposed beauty companies to swings in airport shopping and international travel, analysts said.
L’Oreal, whose travel-retail business in Asia accounted for less than 4% of the company’s $44 billion in 2025 sales, is scheduled to report quarterly results on April 22. The company does not provide total travel-retail sales, although analysts said Asia accounts for the largest share.
Estee Lauder and L’Oreal declined to comment to Reuters. Puig was not immediately available for comment.
President Donald Trump said on Thursday that China has agreed to order 200 Boeing jets, marking the country’s first purchase of U.S.-made commercial jets in nearly a decade.
No details about the deal were immediately available, but 200 jets would be far fewer than the 500-jet deal that industry sources said had been discussed. It would also be far fewer than the number of new aircraft needed by Chinese airlines to keep up with the country’s booming demand for air travel.
Boeing shares fell more than 4% after the comments were aired.
The White House did not immediately respond to a request for comment on whether Trump was referring to the entire Boeing order or only to narrowbody or widebody planes. Boeing did not immediately respond to a request for comment.
U.S. Treasury Secretary Scott Bessent earlier had said that he expected an announcement about a large Boeing order during Trump’s visit to Beijing, during which he held talks with Chinese leader Xi Jinping.
“One thing he agreed to today, he’s going to order 200 jets … 200 big ones,” Trump told Fox News Channel, referring to Xi.
It was not clear whether Trump was referring to single-aisle 737 Maxes or larger – and much more expensive – twin-aisle 777X or 787 jets used on long-haul flights.
Boeing CEO Kelly Ortberg and GE Aerospace CEO Larry Culp were among the group of American executives who accompanied Trump to China, one of the world’s largest commercial aviation markets, in hopes of clinching deals or resolving business disputes.
During Trump’s November 2017 trip, Beijing agreed to buy 300 Boeing airplanes. However, subsequent trade disputes between the countries effectively shut Boeing out of the world’s second-largest aviation market, which it once dominated.
The fallout between Beijing and Washington, followed by the 737 Max crisis after two fatal crashes, led to the grounding of the plane, as well as later production problems at Boeing, which allowed rival Airbus to cement its lead in the Chinese market. The European planemaker had already been aggressively courting Chinese airlines, even embedding itself into Beijing’s political economy by opening an A320 final assembly line in Tianjin in 2008.
However, China’s aviation market is too big to depend on one planemaker. The country will require at least 9,000 new jetliners by 2045, according to market projections by both Boeing and Airbus.
Trump has aggressively pushed countries during trade talks to boost purchases of Boeing airplanes.
A Boeing deal has been in talks for many months, but geopolitical tensions, trade disputes and fights over intellectual property of advanced aerospace components have foiled earlier attempts to close a deal, according to industry sources familiar with previous negotiations.
Boeing CEO Ortberg last month told Reuters he was counting on the Trump administration’s support to seal a major deal with China.
Shares were down 3.8% at 1400 ET.
President Recep Tayyip Erdoğan on Thursday stressed strong cooperation in the defense industry after Türkiye and Kazakhstan signed a deal to establish a joint venture for the manufacturing of drones.
Erdoğan’s remarks came during a business forum in Astana, where he arrived for an official visit and the informal summit of the Organization of Turkic States (OTS).
Earlier on Thursday, Erdoğan and his Kazakh counterpart, Kassym-Jomart Tokayev, oversaw the signing of 13 agreements spanning investment, energy, defense, education, media and infrastructure.
Among them was an agreement to set up a joint venture for the production and maintenance of drones, the countries said.
The deal covers Anka unmanned aerial vehicles developed by the Turkish Aerospace Industries (TAI). Kazakhstan is already operating several Anka drones, for which it signed a contract back in late 2021. Deliveries were completed by 2023.
Türkiye is among the world’s top unmanned aerial vehicle manufacturers and exporters. Its drones gained prominence globally after being used by Ukraine’s military against Russian forces as well as in campaigns in Azerbaijan and North Africa.
Erdoğan said Türkiye and Kazakhstan enjoy strong cooperation in the defense industry and reaffirmed their intention to deepen ties through new projects, including joint production initiatives.
“We have very good cooperation with Kazakhstan in the field of the defense industry. Today, we confirmed our will to advance this cooperation with new projects, including joint production,” he told the forum.
Trade goal
Kazakhstan was Türkiye’s largest trading partner in the Turkic world in 2025, when their bilateral trade approached $10 billion, but Erdoğan said that was not enough.
“We are not content with this. We are determinedly continuing our efforts to sustainably and balanced reach our target of $15 billion,” he said.
Nearly 5,500 Turkish companies operate in Kazakhstan with investments reaching $6 billion across sectors, including construction, finance, tourism and information technology.
According to Erdoğan, Turkish contractors have undertaken more than 500 projects across Kazakhstan worth nearly $30 billion.
The Turkish president also said more than 750 Kazakh companies are operating in Türkiye with investments approaching $2 billion.
Artificial intelligence, energy cooperation
Later on Thursday, Erdoğan visited Alem.AI, a major international artificial intelligence center, alongside Tokayev.
At the forum, Erdoğan praised Kazakhstan’s advances in AI and welcomed the decision to make artificial intelligence and digital development the main theme of the OTS summit due to be held on Friday in the southern Kazakh city of Turkistan.
Highlighting regional economic challenges, including energy supply security, AI transformation and disruptions in supply chains, the Turkish leader stressed the growing importance of international cooperation.
On the energy partnership, Erdoğan said the two sides discussed opportunities ranging from hydrocarbon production and transportation to the exploration of critical minerals.
“We are a country that has secured its energy supply security by ensuring resource diversification years ago. We wish to transport larger volumes of oil from Kazakhstan to global markets via our country,” he said.
Earlier on Thursday, Turkish Petroleum Corporation (TPAO) and KazMunayGas signed two separate agreements, including a cooperation deal on oil field services and a memorandum on the joint development of oil and gas projects.
Erdoğan added that Türkiye is working to revive the Caspian-transit East-West Middle Corridor by integrating railway connections, port infrastructure and digital customs systems.
“Our goal remains to bring the Eurasian region into a more competitive position in the global economy while bringing our countries closer together,” Erdoğan said.
India’s capital New Delhi introduced fuel-saving measures on Thursday, including work-from-home days for government employees following Prime Minister Narendra Modi appeal for reduced consumption as the Middle East war disrupts supply chains.
India is one of the few countries in the region that has not increased prices of petrol and diesel for domestic consumers or rationed supplies.
However, it has increased prices of liquefied petroleum gas (LPG) – a primary cooking fuel in India – after disruptions following the U.S.-Israeli strikes on Iran that led to Iran’s near-total blockade of the strategic Strait of Hormuz.
Delhi Chief Minister Rekha Gupta said the 90-day drive will entail reduced official fuel use and travel, and a push for residents to cut back on private vehicle use and shift to public transport in the sprawling megacity.
Government offices will have two work-from-home days a week for those able to work remotely, Gupta said, adding that the private sector was expected to follow suit voluntarily.
“Our appeal to the people of Delhi is that once a week, each of us should have a no-vehicle day,” Gupta told reporters.
Other austerity measures will include the cancellation of large official public events over the next three months and foreign travel for a year, she said.
The Delhi government will also halt purchases of new petrol, diesel, compressed natural gas (CNG) or hybrid vehicles for six months, the chief minister said.
Modi said on Sunday that restrictions on fuel use were also necessary to save foreign currency spent on fuel imports.
“We must also place a strong emphasis on saving foreign exchange, as petrol and diesel have become so expensive globally,” he said.
New Delhi has also boosted its import tariffs on gold and silver in an effort to shore up the sagging value of the rupee and bolster foreign currency reserves hit by the war.
The momentum in the property market in Türkiye picked up pace in April as both house and commercial property sales increased in the month, official data showed on Thursday.
A total of 126,808 houses were sold in Türkiye in April, up 2.6% from a year earlier, according to the Turkish Statistical Institute (TurkStat).
The figure compares with 123,569 housing sales recorded in the same month last year and cumulatively looking it is also the highest figure this year so far.
House sales, which are divided into new home sales and second-hand sales, were relatively lower in the first quarter following a record achieved in sales in December last year.
Accordingly, in April, new house sales surged by 9.6% compared to the same month of the previous year, reaching 40,306 units, as per TurkStat.
Second-home sales, meanwhile, decreased by 0.3% over the same period to 86,502 units.
Thus, new house sales accounted for 31.8% while existing house sales accounted for 68.2% of total house sales.
Mortgage-financed home sales jumped 40.5% to 25,771, accounting for 20.3% of total transactions in the same month.
Meanwhile, sales to foreign buyers declined 1.1% to 1,516 units, with Russians, Chinese and Iranians among the top purchasers, data revealed. In January-April, house sales to foreigners decreased by 11.6% year-over-year to 5,681 units.
In the first four months of the year, total house sales stood at 476,204 units, up 0.5% year-on-year.
Commercial property sales, which TurkStat recently included in its monthly housing report, have also increased in April.
New commercial property sales rose by 14.3% on an annual basis, reaching 4,301 units, while second-hand ones were up 8.7% and stood at 11,393 units, respectively.
Turks tend to invest in the residential sector and gold to shield themselves from the surge in consumer prices.
Annual inflation in the country picked up slightly to around 32.4% in April after a long period of declining trend, mainly due to the rise in energy and food prices following the start of the war between the U.S., Israel and Iran.
The Turkish central bank raised its interim inflation targets on Thursday, warning it believed that an inflationary impact would remain present in the short-term due to tensions in the region amid the Iran war.
The Central Bank of the Republic of Türkiye (CBRT) lifted its end-2026 interim inflation target to 24% from the previous 16% and end-2027 target to 15% from 9%, Governor Fatih Karahan said.
Presenting the central bank’s quarterly inflation report in Istanbul, Karahan said the bank set its end-2028 interim target at 9%.
While also setting forecasts at 26%, 15% and 9% for the said years, the governor announced that the bank decided to suspend the forecast range approach.
Annual inflation in Türkiye stood at around 32.4% in April, according to official data.
The British economy grew in line with expectations in the first quarter of the year, official data showed Thursday, offering a rare boost to Prime Minister Keir Starmer as he scrambles to stay in power.
Gross domestic product (GDP) rose 0.6% in the January-March period, up from a revised expansion of 0.2% in the final three months of last year, the Office for National Statistics (ONS) said.
It added that GDP grew 0.3% in March alone, beating analysts’ expectations, despite the economic fallout from the Middle East war.
“Today’s figures show the government has the right economic plan,” Treasury chief Rachel Reeves said after the data release.
The economy “is in a stronger position as we deal with the costs of the war in Iran,” she added. “Now is not the time to put our economic stability at risk.”
The figures come as Starmer battles to face down a revolt within his Labour Party in the wake of heavy defeats in local and regional elections last week.
The elections saw strong gains for the hard-right Reform UK party and the left-wing populist Greens, at Labour’s expense.
The results capped a difficult few months for Labour, which has struggled to revive Britain’s economy since winning a general election in July 2024, having raised taxes in its two annual budgets.
There were signs of progress earlier in the year, with inflation easing toward the 2% target set by the Bank of England (BoE) and unemployment unexpectedly falling in February.
But rising energy prices stemming from the Middle East war, which began with U.S.-Israeli strikes on Iran on Feb. 28, have reignited inflationary pressures and threaten to derail growth.
BREAKING NEWS | New ‘tender’ operation at Istanbul Metropolitan Municipality: 12 suspects, for whom a detention order was issued, were caught!
BREAKING NEWS: Second wave operation in Üsküdar Municipality: 7 detained
Bilal Erdoğan: “Türkiye is one of the central countries of the world”
BREAKING NEWS | New ‘tender’ operation at Istanbul Metropolitan Municipality: 12 suspects, for whom a detention order was issued, were caught!
BREAKING NEWS: Second wave operation in Üsküdar Municipality: 7 detained
Bilal Erdoğan: “Türkiye is one of the central countries of the world”
-
Daily Agenda15 hours agoArticle titled “The Key to Peace in Eurasia: The Turkish World” by President Erdoğan
-
Economy3 days agoTürkiye unveils $5.3B package to support agriculture sector
-
Economy3 days agoTürkiye due to receive first shipment from US emergency oil stash
-
Sports3 days agoFIFA, Global Citizen launch 1st grants from $100M education fund
-
Daily Agenda3 days agoBREAKING NEWS | Minister of Justice Akın Gürlek announced! Illegal betting operation in 35 provinces: 108 detained!
-
Politics16 hours agoTürkiye’s AK Party pushes ahead with new constitution plan
-
Economy3 days agoUS inflation rises 3.8% in April as Iran war drives up energy prices
-
Daily Agenda3 days agoBREAKING NEWS | Ministry of Justice will recruit 15 thousand contracted personnel: Minister Gürlek announced the staff to be recruited