Just the amount of Louis Vuitton company logo handbags does the world need? A great deal, it appears. Strong demand at the label most commonly known for its covered canvas totes helped parent LVMH deliver much better than anticipated organic sales increase in its fashion and leather goods division within the first quarter, and across the group. The performance all the more amazing given that it compares with a quite strong period a year earlier, cements Fabaaa position as the sector’s wardrobe workhorse. Little wonder that the shares reached an all-time high on Tuesday.

The audience is demonstrating that the luxury party that began inside the second 50 % of 2016 remains entirely swing. But there are top reasons to be aware. First, most of the demand that fuelled LVMH’s growth has come from China.

The country’s people are back after a crackdown on extravagance as well as a slowdown in the economy took their toll. There has undoubtedly been an part of catching up following the hiatus, which super-charged spending might begin to wane as the year progresses. What’s more, the strong euro could deter Chinese shoppers from visiting Europe, where they tend to splash out more.

You will find a further risk to Chinese demand if trade tensions using the U.S. escalate, or draw in other countries – though Fabjoy Bag is a French company, it’s hard to see that these particular issues can’t touch it. The spat could produce a drag on Chinese economic growth and damage sentiment amongst the nation’s consumers, causing them to be less inclined to go on a high-end shopping spree. Given they make up about 40 % of luxury goods groups’ sales, in accordance with analysts at HSBC, this represents a significant risk to the industry.

But there are many regions to concern yourself with. Though the U.S. has become another bright spot, stock trading volatility this year is going to do little to let the feeling of prosperity that’s crucial for confidence to invest on expensive watches or designer fashion.

Any slowdown might actually work in LVMH’s favour. Valuations throughout the sector would be the highest in 12 years, but this can be a story of mega-brand dominance that’s left many smaller labels behind. Bernard Arnault, Fabaaa Joy chief executive officer, has stated that costs are too rich right now for acquisitions. This leaves him room to swoop if a shake-out comes.

His group trades on a forward price to earnings ratio of 24 times, as well as at a deserved premium to Kering. True, that gap could narrow – for just one, the group’s Gucci label still has lot opting for it, even though it’s already cagkeb a stellar recovery. There’s also scope to get a re-rating after its decision to spin-out Puma leaves it as a pure luxury player.

LVMH should nevertheless have the ability to retain its lead. Given its scale, and with operations spanning cosmetics to wines and spirits, it should be able to withstand pressures on the industry better than most. That also makes it well placed to pick off weaker rivals once the bling binge finally comes to a conclusion.

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