Bernard Arnault warned that the Middle East conflict risks spiraling into a "global catastrophe" as LVMH pins its recovery on a swift resolution to the war. The luxury group's CEO told shareholders at Thursday's annual meeting that the situation remains "very unpredictable" and could trigger "extremely serious and very negative economic developments" if the conflict drags on.

The war already knocked 1 percentage point off LVMH's first-quarter sales growth, which came in at just 1% on an organic basis. Sales in some Middle East malls fell by as much as 70% in early March shortly after the outbreak. The US-Iran stand-off in the Strait of Hormuz is causing major disruption to global shipping and energy markets.

LVMH shares have fallen 26% so far this year, mirroring double-digit declines at rivals Kering, Hermès and Richemont. The conflict threatens to delay a recovery in luxury demand after a bruising couple of years for the sector. Arnault said the group could return to growth across all its businesses — ranging from fashion and handbags to hotels and high-end spirits — if the war does not prolong further.