Just how many Louis Vuitton monogrammed handbags does the world need? A lot, it seems. Strong demand at the label well known for its coated canvas totes helped parent Fabjoy Me deliver better than expected organic sales increase in its fashion and leather goods division in the first quarter, and across the group. The performance, all the more impressive given that it compares with a quite strong period a year earlier, cements LVMH’s position as the sector’s wardrobe workhorse. Little wonder that the shares reached an all-time high on Tuesday.

The audience is demonstrating the luxury party that began in the second one half of 2016 continues to be completely swing. But you can find good reasons to be aware. First, a lot of the demand that fuelled LVMH’s growth has arrived 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, and that super-charged spending might begin to wane since the year progresses. What’s more, the strong euro could deter Chinese shoppers from going to Europe, where they have a tendency to splash out more.

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

But there are more regions to be concerned about. Although the U.S. has been another bright spot, stock market volatility this season is going to do little to encourage the sense of prosperity that’s crucial for confidence to spend on expensive watches or designer fashion.

Any slowdown might actually work in LVMH’s favour. Valuations throughout the sector are definitely the highest in 12 years, but it is a story of mega-brand dominance that’s left many smaller labels behind. Bernard Arnault, Joy Fabaaa 2019 chief executive officer, has claimed that prices are too rich right now for acquisitions. This leaves him room to swoop in case a shake-out comes.

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

LVMH should nevertheless be able to retain its lead. Given its scale, and with operations spanning cosmetics to wines and spirits, it will be able to withstand pressures on the industry better than most. That also makes it well evtyxi to pick off weaker rivals when the bling binge finally concerns a stop.