Newsletter · · Ashutosh Agarwal

Sneakers Peak, Loafers Rise, and Jewelry Pulls Luxury Along - Brands: Luxury, Sneakers & Apparel - Week of August 16, 2026

Brands weekly for the week of August 10–16, 2026. Podcasters read the last rites for the sneaker era as the loafer takes over, The Investor's Podcast sold Lululemon after discounting broke the thesis, luxury stayed two-speed with jewelry carrying hard luxury, and a Navarro proposal to redefine transshipment surfaced as the tariff development that could reshape apparel sourcing.

Brands: Luxury, Sneakers & Apparel

Week of August 16, 2026: Sneakers Peak, Loafers Rise, and Jewelry Pulls Luxury Along

A quieter, more scattered week than the last one, when refund cheques from struck-down tariffs were the whole story. This week the sneaker crowd started reading a eulogy for the sneaker itself, the two-speed luxury market stayed exactly two speeds, the watch and jewelry world came back to life (with jewelry doing almost all the work), and a new and genuinely alarming tariff idea surfaced that could matter far more to the people who make your clothes than the headline duty rate ever did.

Here is what people were actually saying, and why it matters.

1. The sneaker era is ending, and your boss is the proof

The most fun and most bearish take of the week came from The Best One Yet (Aug 11), which argued we have hit "post-peak sneaker." The logic is almost sociological. Sneakers took over the office because they were a small rebellion: "wearing sneakers to work was the rebel move of 20-somethings 10 years ago." But the rebellion is over once the boss joins in: "now that their bosses are wearing those sneakers too," the cool kids have already moved on. To the loafer, specifically. The hosts noted that the Times of London declared 2026 "the year of the loafer," that classic dress-shoe makers like Allen Edmonds, Cole Haan and Johnston & Murphy are "finally getting their formal looks again," and that some sneaker brands are hedging by launching hybrid "sneaker loafers" (yes, "snowfers").

Their governing rule is worth keeping: "once a trend has been recognized with a mainstream label online, that means the trend is already over." A trend that has a name is a trend that has been abandoned by the people who started it.

The investment tie-in they cited: "Bank of America downgraded the whole sneaker stock sector to sell earlier this year." And the fresh evidence was Adidas (ADS GY), whose stock was "down despite tastemaker Pharrell Williams' sneaker" collaboration, the point being that even a culture-defining designer collab is no longer enough to lift the category. This is a near-perfect reversal of the Adidas victory-lap narrative that ran a week earlier. If BofA is right and the whole footwear complex has rolled over, the read-through spreads well beyond Adidas to everyone whose story is "sneakers are the future."

2. Lululemon got sold, and the thing that killed the thesis was discounting

The single most detailed brand discussion of the week was on The Investor's Podcast, TIP837 (Aug 13), where the hosts walked through why they finally sold Lululemon (LULU) out of their model portfolio. They bought around $200 and sold at $116, down more than 40%.

The original case was a good one, and worth hearing because it explains what people loved about this stock: "this really high quality retail brand with industry leading margins, 35% returns on invested capital, 20% CAGRs on historical growth… all for what seemed to me like a very reasonable price of 15 times earnings while they were buying back stock massively." In plain terms: a wildly profitable brand growing fast, bought cheap. The pitch was that Lululemon, as the inventor of "athleisure" (casual athletic clothing you actually live in), could stay cool even after going mainstream, the way Nike and Adidas have.

What broke the thesis was a stack of problems landing at once. North America "decelerated and then declined much faster than I anticipated." Management went unstable: after CEO Calvin McDonald left (under pressure from outspoken founder Chip Wilson), the company is now run by interim co-CEOs ("even more complicated when you're having two short-term leaders instead of just one"), and the incoming permanent boss, Heidi O'Neill, comes from Nike, which did not inspire confidence: "there's definitely more exciting news to get than hearing that someone from that company is coming to rescue Lululemon."

But the clinching signal was mundane and, for that reason, powerful: discounting. The host described shopping the site himself and being "shocked by how much apparel was on sale," then checking the anecdote against data: "I did find data, I think it was from CNBC, that supported the claim that Lululemon has, in fact, been doing an unusual amount of discounting." Why it matters, in his words: discounting "is a very attractive short-term solution because you can boost sales and clear out old inventory… But the problem is that it conditions your customers to wait for discounts to shop." A brand that was famous for selling almost everything at full price is now training customers to wait for the markdown, and that quietly erodes both the premium image and the margins. He named the competition taking share: "Aloe and Viore" (Alo and Vuori) at the premium end and "cheaper knockoffs on sites like Amazon" at the bottom.

To be fair to the bull case, they haven't given up forever, they called this "peak pessimism" and said they'd happily buy it back if it got as cheap as Crocs did (5–6x free cash flow). But the lesson they drew is a durable one for anyone watching apparel brands: watch the discount rack, because a rising markdown rate shows up in the story long before it shows up in the revenue line.

The other side of that trade showed up on RETHINK RETAIL (Aug 12), an interview with the global president of Vuori (still private, valued at over $1 billion), a retail veteran who spent 15 years at GAP, seven at RH, and ran Fabletics' international expansion. Her framing is that Vuori is not a wave riding Lululemon's coattails but a defensible brand in its own right, built on the idea of clothes "built to move in and styled for life," gym-to-office-to-travel versatility rather than pure performance gear. Tellingly, she rejected the winner-take-all view of the category: "it's a little less about there's only one winner… it's a large space." Vuori is now in "over 30 countries" through e-commerce and is rolling out physical stores with a deliberate density-first approach (clusters in China and the UK rather than scattering), using local partners (tennis player Jack Draper, actor Tom Holland for menswear) to plug into each market. The takeaway for the sector: the premium activewear pie is being cut into more slices, and the challengers are executing like grown-ups, not fads.

3. Luxury: still two speeds, and the gap isn't closing

Remarkable Retail (Aug 11) did a mid-year check on host Steve Dennis's standing prediction that "luxury's future will not be evenly distributed," and the earnings scoreboard is bearing it out. The big conglomerates are the laggards: LVMH (MC FP) and Kering (KER FP) (the latter the owner of Gucci and Burberry) are growing "lower than the average retail growth rates" seen elsewhere, and Capri (CPRI) "has been weak." The standouts are the same names that have been winning all along: Hermès (RMS FP) stayed "above average… 6.7% revenue growth" (a touch slower than its recent run, but strong), Ralph Lauren (RL) put up "growth of 13%, 14%… on a constant currency basis," and Richemont (CFR SW) ("mostly in the jewelry business") and Zegna both posted "really strong results."

The reasons the giants are stuck are partly outside their control: China is weak, and Dennis pointed to two geopolitical drags that don't get enough airtime: the war in the Middle East hitting Gulf demand, and Russia, which "in the day… was a huge buyer of these luxury goods." His conclusion: don't expect a broad luxury turnaround until those settle, but the best brands are simply continuing to win regardless. This is the same polarization thesis that has run for weeks; nothing this week challenged it, and the earnings confirmed it.

4. Watches and jewelry come back, and jewelry is doing almost all the pulling

After going quiet last week, watches and jewelry returned in force on Openwork: Inside the Watch Industry (Aug 10), hosted by Collective Horology's Gabe Reilly and Asher Rapkin. The top-line data looks like a recovery: Swiss watch exports in June 2026 were "up 11.2% year over year… about $2.4 billion," with exports to the US "up 12.7%" while exports to China fell "16.5%." The US is now the engine and the swing factor for the whole industry, but a volatile one, because the tariff on Swiss goods has been a rollercoaster: "supposed to be something like 30 percent initially on Liberation Day… 10 percent, then up to 39 percent, then to 10 again. Now they're up at 12.5." Their warning: judge this industry over 18–36 months, not quarter to quarter, because that "bullwhip" of shipments surging when tariffs dip and freezing when they spike distorts every single reading.

The more important structural point is what is selling. Across the big houses, the growth is jewelry, not watches:

  • LVMH's watches-and-jewelry division grew "9%" organically in the first half, accelerating to "+11%" in the most recent quarter.
  • Richemont was the standout, with group sales "up 20%" in the quarter ended June, but underneath, jewelry maisons (Cartier and peers) were "up 24% year over year" while the pure watchmakers (IWC, JLC, Vacheron, Lange) grew just "8%." Management said plainly that "jewelry is really the driver, the engine of growth."
  • Swatch Group (all watches, no jewelry) grew sales "8.5%" but earned an operating margin of "just 1.7%," essentially break-even ("living on the wire," as the hosts put it), blaming a stubbornly strong Swiss franc.

The through-line connects to last week's Bernstein point that shoppers are choosing jewelry over handbags: hard luxury is being carried by the jewelry counter, and a watch-only business like Swatch is stuck making almost no money even as its sales rise. (Housekeeping note from the episode: Baume & Mercier is being spun out of Richemont.)

There was also a rare piece of small-business activism: Collective Horology, an independent watch retailer in Ventura, California, has sued the US federal government over the Section 301 and IEEPA tariffs, alongside a co-plaintiff spice importer, Burlap & Barrel, seeking relief for all small importers. Their argument is one every apparel and footwear importer would recognize: even an "American-made" product leans on a global supply chain (the machines, the movements, the raw inputs), so a blanket import tax lands on domestic small businesses too, and the constant rule changes make it "difficult for small businesses to plan… businesses like certainty and predictability."

5. The tariff story quietly got scarier, and it's about the definition, not the rate

Two episodes together point to a shift that could matter more to brands than any single duty number. The setup came from Supply Chain Now (Aug 10), an interview built around a research paper arguing that "the apparel P&L has broken." The core of it: decades of chasing the cheapest possible labor pushed sourcing from China (about "30 days on the water") through Vietnam, Indonesia, Bangladesh and now Kenya, stretching total lead times past "200 and something days." That means brands "make a bet on what you're going to buy… nine months in advance," right as social media compressed the demand cycle so much that "a trend can emerge, peak and die" in the meantime. The result is a mountain of waste hiding inside the industry: US apparel markdowns run "$300 billion or more" a year, "86% of retailers cite that inventory misadjustment" as the cause, and roughly "120 million metric tons of textiles" (about 100 billion garments) hit landfill annually. A vivid new demand shock: GLP-1 weight-loss drugs have pushed apparel returns "up over 50% year on year," because customers are "going from a size 15 to a size 8 in a span of months" and returning entire wardrobes.

The optimistic counter-example was Abercrombie & Fitch, whose "Always Forward" reset (smaller upfront buys, chasing proven in-season demand, far less discounting) took operating margin "from 1% in FY 2021" to "15% operating margin" in FY 2025 on revenue that grew "from $3 billion to nearly $5 billion," throwing off about $1 billion of cash flow, with full-price sell-through back near 85%. Ralph Lauren was cited as running the same playbook. The lesson: the winners aren't the ones with the cheapest factory; they're the ones who buy tighter and mark down less.

Now the scary part, from Simply Trade (Aug 14), hosted by trade veteran Cindy Allen. On August 13, White House trade advisor Peter Navarro published a New York Times op-ed titled "It Was a Great Scam While It Lasted," backed by a roughly 10-page White House paper, proposing to redefine "transshipment" and, with it, country-of-origin rules. Today, if a component made in one country is built into a finished product elsewhere that goes through "substantial transformation," the finished good takes the origin of where it was assembled, a principle underpinned by "100 years" of law and rulings. Navarro's proposal would instead tax the imported components individually. Allen's example: a motor "wholly produced in China," shipped to Canada and built into a recliner, would no longer count as a Canadian chair: you'd declare and pay duty on the motor and the chair separately. The administration claims this "great scam" has cost "$40 billion to $303 billion" in lost duties.

Why this matters enormously for this sector: apparel and footwear are assembled almost everywhere from Asian inputs: fabric, trims, soles, components. If importers eventually have to "declare all of the components… down to those raw materials," the compliance burden and the effective tariff on a t-shirt or a sneaker could balloon, regardless of where the final stitching happens. Allen's own read was resigned (she titled the episode after Taylor Swift's "Tolerate It"), but she flagged that this could "completely transform how you and I do our jobs." It's early, and overturning a century of case law is a tall order, but this is the tariff development to watch, because it changes the rules of the game rather than the price of one round.

Beauty (thin this week)

Little of investable substance. A vendor case study on SUMM IT UP (Aug 12) claimed L'Oréal, Redken and Kérastase products shown in interactive digital salon displays saw a "140% sales increase" versus salons without them, interesting for in-store merchandising, but a single vendor's number. Express Checkout (Aug 12) covered Ulta (ULTA) pushing into the sexual-wellness category, briefly. And How I Built This (Aug 13) featured Bobbi Brown of Jones Road, but it was a rerun of a September 2025 founder-story episode, no current read.

What stayed silent (worth noting for what didn't come up)

  • Contract manufacturers, Pou Chen (9904 TT), Yue Yuen (551 HK), Feng Tay (9910 TT): nothing, again. The people who actually make the shoes remain absent from the conversation even as sourcing and tariffs dominate it.
  • Single-name sneaker depth on Nike (NKE), On (ONON), Deckers/Hoka (DECK), Skechers (SKX) and New Balance: only glancing mentions this week; the sneaker story was told at the category level, not the company level.
  • Travel retail, duty-free, Macau and Sands China: silent, no read on the Chinese luxury shopper through the gaming/travel lens.
  • US apparel and lifestyle single names, Tapestry (TPR), Capri (CPRI, beyond "weak"), Levi's (LEVI), Birkenstock (BIRK), Dick's (DKS), Foot Locker (FL): no dedicated coverage.