What's going on?

The world�s largest luxury goods company LVMH, which owns bling-bling brands like Fendi, Dior and Sephora, beat investors� expectations for sales in the first quarter � and the stock jumped to its highest price ever on Tuesday!

What does this mean?

Business was tough in 2016 for LVMH: sales growth declined thanks to a double whammy of weak demand in China, one of LVMH�s biggest markets, and a drop in the number of tourists to Europe (who often buy LVMH�s products when they visit) after terrorist attacks in Paris. But the company reported that sales in the first quarter of 2017 had increased by 13% versus last year and that it outperformed expectations in all divisions.


However, the company said those numbers would be hard to replicate through 2017, since they�re comparisons to sales in early 2016 (a particularly weak quarter for LVMH).

Why should I care?

The bigger picture: China�s high-end consumer may be staging a comeback.

China�s economy spent much of last year on the rebound, and at least some of that strength seems to be feeding through into sales of luxury goods (Chinese demand accounts for a big chunk of the luxury market). However, luxury spending seems to be on the up again � revenue at Macau�s casinos have increased for the past eight months, for example.

For markets: LVMH�s earnings could be a good bellwether for the rest of the luxury sector.

Investors certainly seem convinced that LVMH’s fortunes are improving � after today�s rally, the stock is trading more than 10% higher than it was at the beginning of this year. Moreover, strong sales growth in LVMH�s fashion segment could be good news for competitors like Prada and Kering (owner of Gucci), who are also reporting their earnings this month. Those results, and results in the coming quarters, will help show whether the luxury industry is simply stabilizing from the downturn of the past few years or benefiting from a much stronger rebound.