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This article first appeared on GuruFocus<\/a>.<\/p>\n LVMH Moet Hennessy Louis Vuitton (LVMHF<\/a>) is entering<\/a> the year under more pressure than expected, as weakness in its core fashion and leather goods division points to a softer demand backdrop across key luxury markets. Organic revenue in that segment declined 2% in the first quarter, coming in below expectations, while overall group organic sales rose just 1%, also missing forecasts. The shortfall appears tied in part to the Iran war, which disrupted spending in major Middle Eastern shopping hubs like Dubai, offsetting more encouraging trends seen in China and the US.<\/p>\n The Middle East, which accounts for around 6% of total sales and is typically a highly profitable region for the group, saw demand weaken after what management described as a strong start to the year. LVMH indicated the conflict reduced organic growth by about one percentage point in the quarter, suggesting performance could have been closer to flat without that impact. CFO Cecile Cabanis noted that demand in the region remains very much down, reinforcing the idea that geopolitical uncertainty may continue to weigh on near-term results. Shares fell as much as 3.2% in Paris following the release, adding to a difficult start to the year that has already seen the stock decline 28% in the first quarter.<\/p>\n Outside the Middle East, performance trends were more mixed and could be somewhat constructive. The US and China both delivered stronger-than-expected growth, with organic revenue increasing 3% and 7% respectively, supported by solid New Year shopping activity in China and improving momentum at Sephora. Europe and Japan, however, lagged, partly due to softer tourism flows. Within the portfolio, more exclusive brands such as Loro Piana posted double-digit growth, suggesting higher-end consumers may still be spending despite broader weakness. Management also pointed to a good start at Christian Dior Couture under its new creative direction, but emphasized that the overall environment is likely to remain highly volatile in the coming months.<\/p>\n<\/p><\/div>\n