Airports are shut — and luxury’s highest-margin channel is buckling

From DFS to Avolta, duty-free stores selling premium perfumes and spirits to big spenders are feeling the pinch as conflict in the Middle East shuts airports and curbs travel to the region — a setback likely to become more acute as 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 closures 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 pandemic, squeezing underperforming businesses such as LVMH’s DFS and weighing on prestige beauty and luxury firms including Estée Lauder, Puig and L’Oréal.

International flights to and from the Middle East plummeted in the first half of March. While some UAE airlines are slowly restarting, flights remain well below normal. Flight cancellations from the region, excluding Turkey, decreased from a peak of 65% on March 3 to 13% on March 27, according to Cirium data — though the number of flights scheduled has also fallen.

DFS “is costing two percentage points of growth” for LVMH’s selective retailing division, which includes Sephora, group CFO Cécile Cabanis told analysts. The conflict shaved at least 1% off group sales in the latest quarter due to lower Gulf spending. “What we see today is still that demand is very much down,” Cabanis said.

Companies in the $74 billion travel-retail industry have been shifting inventories and temporarily closing airport stores in the region. Dubai International Airport, whose retail outlets include L’Oréal’s Aesop, Kering’s Gucci and Estée Lauder’s Jo Malone, is operating a reduced number of terminals after a drone attack forced it to close temporarily. Kuwait International Airport has been shut due to repeated drone strikes, halting sales for 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 said. Still, partly shuttered airports in some instances led to strong sales of food and other items for stranded travellers, for instance at Dubai airport.

Kering CFO Armelle Poulou said 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.

Investors are watching Estée Lauder’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 — making it one of the beauty companies most exposed to swings in airport shopping. L’Oréal, whose Asian travel-retail business accounted for less than 4% of 2025 sales of $44 billion, reports on April 22. Estée Lauder and L’Oréal declined to comment; Puig was not immediately available.