LVMH CEO sees warnings signs flashing in the luxury sector

French luxury group LVMH Chairman and Chief Executive Officer Bernard Arnault
Eric Piermont | AFP | Getty Images

When things are going well, companies often tout their accomplishments and expect the fun to never end.

Not LVMH Moet Hennessy Chairman and Chief Executive Bernard Arnault.

In the company's latest earnings call, Arnault sounded the warnings bells that the good times might be over in the luxury sector.

"Over a 10-year period, normally, there are eight good years and two not so good years or even a very bad year. Now, we're coming to the end of the 10-year period," Arnault said, noting that the last major crisis dates to 2008.

And it's not just a matter of timing, Arnault cited several situations that could change investor and consumer sentiment. Among them, the likelihood that interest rates will rise, the "exuberance" with which stocks are rising and a "geopolitical situation that's difficult to read."

The CEO went on to say that he has conveyed to his teams that they should plan the year with great caution and be "very vigilant."

"Geopolitical economic events ... might unfold in a way that isn't particularly helpful," he said. "We really need to be prudent."

Arnault's comments followed a quarter in which the company's net profit in the second half jumped 14 percent from the year-earlier period, boosted by solid sales across its brands, which include luxury labels Louis Vuitton and Fendi, Bulgari jewelry, and cosmetics retailer Sephora.

The positive earnings news sent LVMH shares to an all-time high on Thursday.

Arnault expects the first half of 2017 to be relatively positive as the company faces lower hurdles than in first half of 2016, but the situation could change quickly in the second half of the year.

Trump on meeting with LVMH CEO
Trump on meeting with LVMH CEO

Arnault told analysts that he expects LVMH has some pricing flexibility if President Donald Trump goes ahead with plans to raise border taxes on imports. However, he added that he is more concerned about the rippling effects of such a move on the global economy.

"Most important is to see what's going to be the global impact of changes underway," said Arnault, citing both policy changes in the U.S. and in Europe with Brexit.

Arnault met with Trump earlier this month at Trump Tower in Manhattan. The two reportedly discussed the possibility for LVMH to expand manufacturing the U.S. The company is looking at sites in North Carolina and Texas, and may consider a location in the Midwest. An expansion of its California facility is also a possibility, Arnault said at the time.

—CNBC's Courtney Reagan contributed to this report.