Luxury conglomerate LVMH saw its second-quarter sales tick upward, buoyed by robust demand from affluent American consumers, helping to counteract a slowdown in European spending.

The latter was attributed to a dip in tourism following the Iran war.

The owner of iconic brands such as Louis Vuitton, Dior, and Moët & Chandon, reported a 3% rise in sales, adjusted for currency fluctuations, reaching €19.5 billion ($22.2 billion).

This figure largely aligned with analysts' consensus estimates, according to Visible Alpha.

Growth was predominantly fueled by the United States, where sales climbed 6% – an acceleration from the 3% increase recorded in the first quarter.

LVMH highlighted strong demand driven by newly generated wealth, particularly from the booming artificial intelligence and technology sectors.

The Watches & Jewellery division emerged as LVMH's strongest performer, with organic sales surging 11%, an increase from 7% in the preceding quarter.

Brands like Tiffany and Bulgari experienced mid-teen growth, indicating a continued preference among wealthy shoppers for "hard luxury" items over softer categories.

Cecile Cabanis, LVMH's finance chief, expressed a more optimistic outlook than after the first quarter's subdued results.

"What you've seen is that despite continued instability in the macro environment, trends improved across all geographies in H1 and where wealth is created, consumer appetite for luxury and for our products in particular is strong," she told analysts.

In contrast, the fashion and leather goods division, which typically accounts for the majority of LVMH's operating profit, recorded a modest 1% organic growth.

This increase was primarily driven by U.S. consumers and marked the segment's first quarterly rise in two years, though it fell short of analysts' expectations for a 1.7% gain.

The French group, helmed by billionaire Bernard Arnault, noted that the Iran war shaved one percentage point off the division's growth.

However, Dior showed promising momentum under its new creative director, Jonathan Anderson, who notably designed Taylor Swift's wedding dress, outbidding rival Chanel.

European sales remained flat during the quarter, stabilizing after a decline in the first three months of the year, as the conflict in the Middle East continued to impact tourism.

In a rare public statement on Sunday, Arnault dismissed media speculation about a contentious succession battle among his five children, asserting that his family remains united.

European luxury brands are increasingly focusing on the U.S. market, establishing new stores and hosting fashion events to capitalize on the wealth generated by near record-high stock markets.

However, questions persist regarding whether LVMH's relatively modest sales growth is sufficient to convince investors that the $400 billion luxury sector is definitively recovering from a two-year downturn.

Bernstein analysts commented in their initial reactions, "We wonder if this could be good enough to sustain the share price and get investors to stand up and pay attention."

LVMH's U.S.-listed shares were down 1.6% at 1704 GMT, briefly touching their lowest point since June of last year.

The French group's shares have declined 28% year-to-date, positioning LVMH as one of Europe's poorest-performing large-cap stocks.

RBC analysts offered a more positive assessment, stating, "Net, we view this as a reassuring print particularly on better than expected margins and earnings." Yet, they added a caveat: "However questions will likely be asked around whether (second half) consensus expectations are achievable given increasingly tougher comparative."

For the first half of the year, LVMH's sales increased 2% on an organic basis but saw a 3% reported decline to €38.6 billion. Profits from current operations fell 4% to €8.7 billion over the same period, with currency movements reducing earnings by approximately €700 million, though the operating margin held steady at 22.5%.

Rival luxury houses Kering and Hermes are scheduled to release their results on Tuesday and Wednesday, respectively.