Luxury stocks slump as Middle East conflict risks one of the sector’s 'few bright spots’

In this article CFR-CH KER-FR BRBY-GB MC-FR Follow your favorite stocks CREATE FREE ACCOUNT New York City. Adam Gray | Reuters Luxury stocks were among the hardest hit sectors early Tuesday, with European markets heading for another day of losses as the conflict in the Middle East intensified overnight. Shares of conglomerate LVMH , Gucci-owner Kering , and British outerwear maker Burberry were among the worst performers, with week-to-date losses approaching 10% each. The wider European blue-chip index, Stoxx 600 , was down nearly 3% Tuesday, after falling 1.6% on Monday. The Middle East has been a driver of growth in the sector, which is battling a difficult macroeconomic backdrop, and many formerly best-selling brands are struggling to resonate with consumers. The region's strength, however, hasn't been enough to offset weakness elsewhere, notably in China , and industry giants like LVMH and Kering are still struggling to get sales back on a positive track. "The Middle East has been one of the few bright spots," Morningstar analyst Jelena Sokolova told CNBC. "You have one area which was small, but which was very, very vibrant, and it's being affected now." The U.S. and Israel launched widespread attacks on Iran over the weekend that killed the country's Supreme Leader Ayatollah Ali Khamenei. Iran responded with retaliatory strikes, and the conflict now engulfs the wider Middle East region with no clear endpoint in sight. U.S. President Donald Trump has said the war could last for four to five weeks, but that it could go on "far longer than that." Shares of Richemont , the owner of Cartier, Van Cleef, and Chloé, fell heavily on Monday and Tuesday, with a relatively big exposure to the region. Luxury stocks fall as the U.S.-Iran conflict escalates. But even with Middle East revenue exposure on average in the mid- to-high single digits for luxury brands, repercussions could spread if a conflict lasts for weeks or even months. "If people don't go back to normal, and w...