Newsletter · · Ashutosh Agarwal

Luxury's American Rescue and Adidas Wins the World Cup - Brands: Luxury, Sneakers & Apparel - Week of August 2, 2026

A synthesis of what investor and operator podcasts said about luxury, sneakers and apparel for the week of July 26 to August 2, 2026, including LVMH breaking a seven-quarter losing streak on American demand, Adidas beating its World Cup plan by 50 percent, and Section 301 tariffs becoming permanent.

Brands: Luxury, Sneakers & Apparel

Week of July 26 to August 2, 2026: Luxury's American Rescue, and Adidas Wins the World Cup

LVMH, Hermès, Ferrari and L'Oréal all reported inside a few days, and the shows that follow this sector spent the whole week working through the numbers. The story that came out of it is a strange one: European luxury is being rescued not by China, where it made its fortune, but by the American shopper, and specifically by American shoppers who feel rich because the stock market is up. That is a comforting story and a fragile one at the same time, and at least one respected analyst spent the week saying so out loud.

Elsewhere, the sneaker debate flipped completely. Last week three separate shows piled onto Nike and called it "toast." This week the conversation moved to Adidas, which quietly won the World Cup, sold half a billion euros more in jerseys than it expected to, and reminded everyone what brand momentum actually looks like. And underneath all of it, one show laid out the single most important structural fact for anyone who makes clothes or shoes for a living: the tariffs are now permanent, and apparel and footwear are the categories with nowhere to hide.

Here is what the week sounded like.

1. LVMH's quarter: the first good news in two years, and who to thank for it

Start with the biggest company in the sector. LVMH, the French conglomerate that owns Louis Vuitton, Dior, Tiffany, Bulgari, Moët and roughly seventy other brands, reported second-quarter sales up 3% to €19.5 billion (about $22 billion), which came in slightly ahead of what analysts expected (Squawk Box Europe Express, July 28; Brew Markets, July 29).

The number that actually matters is buried one level down. LVMH's biggest division is Fashion & Leather Goods, which is Louis Vuitton and Dior, the engine of the whole company, and it grew 1% in the quarter. One percent sounds like nothing. It is the whole point. As CNBC's correspondent explained on Squawk Box Europe, that division had just posted "seven consecutive negative quarters" in a row, and this "finally broke" the streak. After two years of shrinking, the most important business at the most important luxury company stopped shrinking.

Who did the rescuing? Americans. "Growth was driven by the US as well as Japan," the Squawk Box team reported, with US sales up 6%, "a big acceleration compared to the previous quarter," and, within Fashion & Leather specifically, "the Americans grew double digits." The revamp at Dior under its new creative director, Jonathan Anderson, "seems to be bearing fruit," and management said Anderson's first designs had an "excellent start." Even the long-suffering wine and spirits division, champagne and cognac, grew 5% after a big restructuring.

So why is the stock still down 25% to 27% for the year, worse than its rivals Hermès and Richemont? Because a recovery led entirely by American wealth is a nervous kind of recovery. The Squawk Box team quoted Luca Solca, the luxury analyst at Bernstein, making exactly this point: the US strength is closely tied to the stock-market boom, and "if we see the stock market slowing down in the second half of the year, or the tech bubble bursting eventually, then that's when we might see an impact for the luxury players." Put simply: LVMH's best customers right now are people who feel wealthy because their tech stocks went up. If that reverses, so does the shopping. And that same week the KOSPI in South Korea was slumping and Nvidia shares had fallen 5%, so the "what if the AI trade cracks" worry was not hypothetical.

There was also a soap opera running alongside the earnings. A French newspaper, Le Monde, ran six long articles on Bernard Arnault, LVMH's 77-year-old founder, who has five children and no named heir, describing succession as "the poison at the heart of LVMH." Arnault, who had been silent in the press for years, joined X for the first time to fire back, calling his family "the last royal family of France" and writing that his children "run businesses, manage teams, make decisions, and call one another on Sundays" (Brew Markets). The succession question is a genuine one for investors, since the board recently raised the CEO age limit to 85 so Arnault can keep the job. But the numbers are the story.

2. Hermès and Ferrari: the top of the pyramid holds up better

If LVMH is the "aspirational" end of luxury, the shopper who is stretching a bit to buy a bag, then Hermès and Ferrari are the top of the pyramid, where the customer is a billionaire and the waitlist is the marketing. And they held up better.

On the Chit Chat Stocks luxury round-up (July 31), the hosts walked through all three:

  • Hermès grew revenue 7% on a constant-currency basis (that means stripping out the effect of exchange rates, to show the underlying volume). China and the Middle East were "still struggling," but the brand kept growing anyway. It trades at a rich price, around 36 times earnings.
  • Ferrari grew 11% on the same basis, with total shipments essentially flat. That combination, more revenue on the same number of cars, is the definition of pricing power, and it is exactly what you want to see from Ferrari, which deliberately keeps volumes scarce so the brand never feels common. The hosts noted Ferrari hit its full-year 2026 sales goal for its new model "in two months." It trades around 37 times earnings.
  • LVMH, by contrast, grew revenue only 3%, with leather goods up just 1% (as above), and trades much cheaper, around 21.5 times earnings.

The hosts' honest verdict is worth repeating because it resists the easy conclusion. Asked which of the three interests them most, the answer was Hermès, "you're probably going to get more stability in a downturn... more consumer spending stability" because it is "true luxury," the world of Birkin-bag waitlists, but with the caveat that "it's still not cheap cheap" and that "something about all three of these is not doing it for me right now when I feel like there's other businesses that could grow faster trading at cheaper multiples." Their bottom line: "Hermès is getting much, much more interesting," but none of the three is a screaming bargain. That is a more useful read than a simple buy or sell: the quality is not in question, the price is.

The clean way to hold the whole quarter in your head, courtesy of Squawk Box: this is "two very different stories, the high end of luxury, and one that is very much the aspirational buyer and a turnaround story." The high end (Hermès, Ferrari) never really broke. The aspirational middle (LVMH's handbags) is only now, tentatively, turning.

3. Watches and jewelry: the one category everybody loved

There was one part of the luxury business that grew strongly everywhere it was measured this week: watches and jewelry.

At LVMH, watches and jewelry grew 11%, the standout category, driven by Tiffany and Bulgari, with Tiffany's brand-new ambassador Natalie Portman getting a specific mention (Squawk Box; Brew Markets). Crucially, the strength was concentrated in the US, Japan and South Korea, again "a clear connection with the stock market boom." This echoed what Richemont (the owner of Cartier) had said a week earlier, so it is a category trend, not a one-company fluke.

The most interesting jewelry discussion, though, came from an unexpected place: The Curve (July 28), a UK lifestyle show, which spent a segment on the Cartier Love bracelet as both a status symbol and an investment. The facts they cited are a neat illustration of how these brands actually make money: Cartier raised US prices by roughly 7% in late 2025, and a Love bracelet that cost about $6,000 in 2022 now runs close to $8,000, up about 26% in three years. (For comparison, they noted the Hermès Birkin bag has returned 92% in the pre-owned market over ten years.) The mechanism is simple and powerful: "the retail price is being constantly bumped up year on year... it's not just inflation, it's serious price increases," which is what lets the item hold or grow its value.

But this is the part worth flagging: the hosts were talking themselves out of buying one. The bracelet has become so common ("everyone on socials wears this bracelet") that it is starting to feel less like status and more like conformity: "nothing says individuality quite like wearing the exact same £4,000 bracelet everyone else has." And they pointed to money rotating away from luxury goods and toward luxury experiences, citing luxury cruises up 12%, private jets and yachts up 11%, and fine dining up 7%, even as LVMH shares fell. That tension, aspirational goods losing their aspirational shine while the truly wealthy buy experiences instead, is the soft underbelly of the whole "luxury always recovers" assumption, and it is worth keeping an eye on.

4. China: the read depends on what you're selling

Everyone watches China because it has historically been the biggest driver of luxury sales. This week the China read split cleanly by category.

For handbags, China is still soft. Hermès called China "still struggling." LVMH's Asia-ex-Japan region grew only 4%, and that was decelerating from the prior quarter.

But for beauty, China is recovering. On Bloomberg Talks (July 29), L'Oréal CEO Nicolas Hieronimus was direct: "China is back to positive territory and is driven by luxury... there's a stronger appetite right now for premium in China." His L'Oréal Luxe division was up 10% in China after six months. So the honest answer to "is China back?" this week is: it depends on the product. The premium beauty consumer is spending again; the handbag consumer is still cautious.

5. Adidas wins the World Cup, and Nike's bear case goes quiet

Now to sneakers, where the mood did a complete reversal from last week.

The story this week was Adidas, and it was a genuinely good one. On Bloomberg Intelligence (July 29), the analyst laid it out: both teams in the World Cup final wore Adidas, so "who won the World Cup? It's Adidas of the athleisure names, and that's great brand heat for them." Adidas had guided to about €1 billion in World Cup kit and jersey sales; it delivered €1.5 billion, 50% above plan. That is the kind of number that turns a sponsorship line item into a real earnings driver.

The competitive picture around it is useful to have straight:

  • Nike finished "third place" at the World Cup in brand terms, but still did well: it was the top-searched kit from April through June, with the USA averaging more than 14,000 weekly searches, and it had Mbappé. In the global footwear market, Nike holds "over 20%" share versus Adidas at "around 12%," so Nike is still nearly double Adidas in shoes. In apparel, though, the two are close: Nike about 10%, Adidas about 9%. The analyst's point: apparel "is the opportunity for both of them to step up and really gain margin," because clothing is a bigger, more fragmented pool than footwear.
  • Puma is "much smaller," in the middle of a turnaround, and trying to find its place. Where it wins is in the smaller sports Nike and Adidas don't chase as hard, cricket and Formula 1, and Morocco and Switzerland reaching the quarterfinals gave it some visibility.
  • One straw in the wind: Adidas has owned the World Cup match ball for about 25 years, and that is now "likely taken over by Nike in 2027, 2028." Contracts change; momentum changes with them.

Nike also picked up a marketing win. On EMARKETER's Reimagining Retail (July 29), a panel voted Nike's six-minute "Off the Script" film the most impactful campaign of the moment, made more impressive, they noted, because "Nike was not an official FIFA sponsor" and still managed to dominate the conversation around the tournament.

The contrast with last week is the real signal here. Seven days ago, three separate shows were calling Nike a broken brand that had "lost its moat." This week the sector's attention moved to the brand that was actually winning, and Nike, for a week, got the benefit of simply not being the story. That does not mean Nike's problems are solved; nobody was defending the fundamentals either.

6. The tariff fact that matters most: apparel and footwear have nowhere to hide

If you make or sell clothes and shoes, this is the segment to read twice.

On InvestTalk (August 1), the host walked through the new Section 301 tariffs the US imposed in late July: roughly 60 countries, covering about 99.4% of American imports, at 10% for countries with forced-labor import bans and 12.5% for everyone else. His central argument: stop treating these as temporary. Earlier emergency tariffs (the "IEEPA" tariffs) were struck down by the Supreme Court because the President had overreached his emergency powers. But Section 301 is different: it is "a well-established legal basis for U.S. trade action for more than four decades," and the Supreme Court recently declined to even review it. In his words, that "removes the legal out." These tariffs are now a permanent feature of the landscape, "not under this administration, probably not under the next administration."

And here is the part specific to this newsletter's world. He named apparel and footwear as "the sectors most permanently disadvantaged," alongside consumer electronics, because they are "categories where the U.S. has virtually zero manufacturing base." There is no domestic factory to shift production to, so the tariff becomes "permanent high costs that get passed through to consumers." Retailers whose entire model is built on cheap global sourcing, he named fast fashion specifically, "are going to face structural margin compression." Either they raise prices and sell less, or they eat the cost and earn less. There is no third door.

Won't the factories just come back to America? "Not so much," he said: reshoring indices were still negative through 2025 despite a full year of high tariffs, because a new factory takes three to five years to build and US wages, energy costs and labor shortages make most consumer-goods manufacturing "uncompetitive without even larger subsidies." Where reshoring does happen is in strategic industries with national-security backing, semiconductors and defense, not sneakers. To size the consumer hit, he cited a Tax Foundation estimate of roughly a $900 average household tax increase in 2026, and perhaps 30 to 50 basis points of added structural inflation. And two more Section 301 investigations are pending, one covering "excess manufacturing capacity" across more than 75% of US imports, which could add further duties later this year.

The read-through for the tickers on our radar is uncomfortable and durable: every brand that sources shoes and clothing from Asia, which is essentially all of them, now carries a permanent, structural cost headwind that is not going to be negotiated away. It shows up as either thinner margins or higher shelf prices, and it is a bigger deal for the value end (fast fashion, dollar stores) than for the true-luxury end, which has the pricing power to pass it through without losing the customer. This is the quiet reason to prefer pricing power in this sector right now.

7. Beauty: L'Oréal's breadth, and Ulta's bet that stores still win

Beauty was the other genuinely rich vein this week.

L'Oréal CEO Hieronimus (on Bloomberg Talks) reported first-half growth of 6.5%, "way above the market." His explanation is a lesson in why diversification is a moat: all divisions and all price points, "from products at 4 or 5 euros to product at 300," contributed at once. His four biggest growth drivers span the whole spectrum: L'Oréal Paris (mass market), Kérastase (professional hair), La Roche-Posay (dermatological) and Yves Saint Laurent (luxury). "Whenever something is struggling a bit, we can bounce back in another area," which is exactly how a soft Middle East got offset by a recovering China this half.

The specific trends he flagged are worth knowing:

  • Hair care and fragrance are the fastest-growing categories. Part of the hair-care boom he ties to demographics ("hair is longer and more diverse... people need more care") and part to the weight-loss drugs: people on GLP-1 medications sometimes experience hair loss, so they buy products to protect and regrow hair. L'Oréal even launched a new Kiehl's product aimed at GLP-1 users.
  • A charming anecdote with a real point behind it: he suspects some of the fragrance boom in sweet, "gourmand" scents comes from GLP-1 users who, deprived of sugar, are drawn to sweeter smells, citing two "stunning successes," YSL Libre Berry Crush and La Vie Est Belle Vanilla. Whether or not the causation holds, it shows how closely these companies track shifts in consumer behavior.
  • AI is speeding up the product engine. He said AI lets his researchers "divide by four the time to bring to market a new molecule" while more than doubling the number of molecules screened, "R&D on steroids" across 40 brands. Innovation as a percentage of the business more than doubled versus the prior year's first half, which he credits for market-share gains.
  • Deals: L'Oréal is pulling forward the Gucci beauty license (taking it from Coty) by a full year, so it starts selling Gucci products on July 1, 2027, a positive for future growth. It also bought Innovist in India (two brands plus an e-commerce platform); India is now a top-eight contributing country. And e-commerce is growing at 18%, roughly twice the market.

On the retail side, Ulta Beauty's Chief Retail Officer, Amiee Bayer-Thomas, made the case for physical stores on Remarkable Retail (July 28). Her mantra, "stores are queen," frames the store not as a place to check out but as an "acquisition engine" that pulls in new customers. The supporting numbers: Ulta will run more than 140,000 in-store events this year (up from over 100,000 last year) across its 1,500-plus stores, and 85% of the US population lives within 20 minutes of one. The most counterintuitive finding came from a NielsenIQ study of Gen Alpha, today's kids, the first truly AI-native generation. You would expect them to shop online. Instead, the ones most engaged with AI and digital tools come into stores at a higher rate, 56%, versus 36% for the less-digitally-engaged. Her conclusion, and it is a genuine insight for anyone writing off physical retail: the digital-native generation values the in-store experience more, not less.

Ulta also gave a small, sharp example of where beauty growth is coming from. On the Glossy Beauty Podcast (July 30), reporters detailed Ulta's first-ever dedicated men's masstige fragrance brand, "masstige" meaning affordable-but-elevated, between mass and prestige. It is called Noteworks (a sub-brand of an indie label, Sniff), with four $74 colognes aimed squarely at teenage boys who have been priced out of the $90-plus legacy designer scents. The behavioral detail is the interesting part: there is a large, mostly-online community of young male "fragrance heads" on TikTok and Reddit who collect scents the way an earlier generation collected Pokémon cards; the founder described one 16-year-old with more than 100 bottles. Ulta co-developed the brand specifically to capture that community. It is a small launch, but it tells you where the incremental beauty dollar is being fought for: young, online, collector-minded, and previously ignored.

8. Travel retail, from an unusual angle

Travel retail, the duty-free and airport-and-cruise channel that is a real profit center for luxury and beauty, showed up this week through the cruise industry. On The Luxury Item with Scott Kerr (July 28), Lisa Bauer, CEO of Starboard (which runs the shops on cruise ships), pushed back hard on the "mall at sea" cliché and described a genuinely lucrative channel: vacationers, in a spending mood and "celebrating something," make four- and five-figure impulse purchases of jewelry and watches they would never make at home. Jewelry, Swiss watches and vintage handbags are the "explosive" categories and the majority of onboard luxury sales, to the point that a Hublot boutique on one ship became the number-one Hublot in all of travel retail, and a Tag Heuer on another did the same. Two data points with wider read-through: 50% of engagement rings now sold in the US are lab-grown diamonds (which is why Starboard now stocks them), and the company is trying to extend its "vacation mindset" retail model onto land in Las Vegas, Orlando and Savannah, though it admitted the hard part on land is that "the cruise line brings us the customers; on land, we have to find them." Separately, L'Oréal's CEO flagged that the Middle East conflict is hurting travel retail by disrupting travel itself, a reminder that this channel lives and dies on people actually moving around.

The one thing to take away

The luxury sector just got a real quarter of good news, and it is worth taking seriously: LVMH's core business stopped shrinking, watches and jewelry grew double digits, L'Oréal beat handily, and the high end never wobbled. But read the fine print. The rescue is American, and the American shopper's confidence is riding on a stock market that spent the same week getting nervous about the AI trade. Bernstein's analyst said the quiet part plainly: if the market cracks in the second half, luxury feels it. Meanwhile, underneath the good headlines, the tariff picture hardened into something permanent that squeezes everyone who makes clothing and footwear, hardest at the cheap end. The combination argues for the same thing from two directions: in this sector, own the pricing power. Hermès can raise prices and keep the customer; Ferrari can sell the same number of cars for more money; L'Oréal can pass costs across 40 brands. The names without that power, the aspirational middle and the value end, are the ones carrying both the wealth-effect risk and the tariff cost. This week the market was celebrating the top line. The durable edge is still in who gets to set the price.