- March 21, 2020
Fabjoy Bag – Discover Unique Skills..
Just the amount of Louis Vuitton company logo handbags does the world need? A whole lot, it appears. Strong demand at the label most commonly known for its coated canvas totes helped parent LVMH deliver better than anticipated organic sales growth in its fashion and leather goods division within the first quarter, and across the group. The performance all the more remarkable considering 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 group is demonstrating the luxury party that began within the second half of 2016 is still in full swing. But there are good reasons to be cautious. First, much of the demand that fuelled LVMH’s growth comes from China.
The country’s consumers are back after having a crackdown on extravagance as well as a slowdown inside the economy took their toll. There has undoubtedly been an part of catching up following the hiatus, and that super-charged spending might commence to wane as the year progresses. What’s more, the strong euro could deter Chinese shoppers from going to Europe, where they have an inclination to splash out more.
There exists 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 view these issues can’t touch it. The spat could develop a drag on Chinese economic growth and damage sentiment one of the nation’s consumers, which makes them less inclined to go on a high-end shopping spree. Given they make up about 40 percent of luxury goods groups’ sales, based on analysts at HSBC, this represents a significant risk to the industry.
But there are other regions to worry about. Although the U.S. has become another bright spot, stock exchange volatility this season can do little to encourage the feeling 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 across the sector are definitely 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 claimed that charges are too rich right now for acquisitions. This leaves him room to swoop when 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 one, the group’s Gucci label still has lot going 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 being a pure luxury player.
LVMH should nevertheless have the capacity to retain its lead. Given its scale, with operations spanning cosmetics to wines and spirits, it will be able to withstand pressures on the industry a lot better than most. Which makes it well placed to pick off weaker rivals if the bling binge finally comes to an end.