Shares of LVMH dropped Tuesday after it flagged a hit to sales from the Iran war, overshadowing underlying improvements.

The luxury conglomerate missed sales expectations with organic growth in the quarter amounting to 1%. 

LVMH also flagged a 1% negative impact from the Iran war in the quarter.

“When the conflict started, and in the month of March, there was a shortfall and a deterioration of demand between 30% and 70%, depending on the malls, depending on the businesses,” LVMH CFO Cécile Cabanis said on a call with analysts late Monday, referring to the Middle East region which accounts for about 6% of group sales.

It’s “anybody’s guess” what the outcome of the conflict will be, Cabanis said. “What we have not seen yet is repatriation, and what we know is that the wealth has not evaporated, so there will be a time where we’ll see that coming, probably elsewhere, and mitigate the impact, should the conflict continue.”

“Party postponed,” said Berstein analyst Luca Solca in a note. The luxury sector had begun to show signs of recovery after a years-long slump prompted by soft demand from Chinese consumers, formerly one of the sector’s main growth drivers.

Even if results were better than a year ago, “this is likely not enough to convince investors to step off the fence,” Solca said.

LVMH stock fell 2% in morning trading in Paris, adding to a 27% loss year-to-date.

“The most important nationalities supporting luxury goods spend — the Chinese and the Americans — are improving and staying strong,” Solca told CNBC’s “Europe Early Edition” on Tuesday.

Organic sales declined by 3% in Europe and Japan, respectively, in the quarter, while sales in the U.S. grew by 3%. Asia excluding Japan grew 7%.