Core Insights - Former Coach CEO Lew Frankfort expresses skepticism about the effectiveness of new tariffs in bringing luxury handbag production back to the U.S. [1][3] - He emphasizes the importance of manufacturing products outside the U.S. to provide consumers with the best value [2][4]. Industry Challenges - The U.S. faces a shortage of skilled workers, particularly in craftsmanship, which is crucial for luxury goods production [3][4]. - Frankfort highlights that many jobs in the U.S. remain unfilled, affecting various industries, including automotive [3][4]. Company Performance - Tapestry, the parent company of Coach, reported a fiscal fourth-quarter revenue of $1.7 billion, an 8% increase year-over-year, surpassing consensus estimates [6]. - Adjusted earnings per share for Tapestry rose 13% to $1.04, exceeding expectations [6]. Strategic Recommendations - Retailers are advised to be cautious in passing costs to consumers and to avoid jeopardizing their suppliers' viability [5]. - Frankfort suggests developing entry-level products to cater to discerning consumers seeking more affordable options [5]. Future Outlook - Evercore ISI analyst Michael Binetti projects Tapestry's annual earnings could grow to between $6.40 and $6.85 per share by FY28, with a bullish scenario reaching $7.50 [7].

Core Insights - Retailers and brands are planning to increase prices to mitigate the impact of tariffs, but this strategy is complicated by economic challenges and the approaching holiday season [1] - Executives from major off-price companies are closely monitoring mainstream retailers' pricing strategies to maintain their value advantage while raising prices [2] - Consumer confidence is declining due to tariff-related price increases and a weakening labor market, leading to slower growth in personal consumption expenditures [2][3] Consumer Spending Trends - US consumer spending growth is expected to remain weak through 2025, with a potential uneven recovery starting in late 2026 across different income groups and spending categories [3] - Wealthier households are increasing their spending on luxury goods, while lower-income households are focusing on essential items, highlighting a growing divide in consumer behavior [3] Price Increases in Luxury Goods - Prices for luxury goods are rising significantly, with high-end luxury handbags increasing by 9%, mid-tier luxury handbags by 14%, women's sneakers by 12%, women's boots by 9%, and women's denim jackets by 34% over the past year [4]

Group 1 - Ulta Beauty's stock has increased by 19.65% year to date, outperforming broader retail benchmarks, while LVMH's stock has decreased by 11.39% YTD due to concerns over weakening demand in China and Europe [2][4] - The shift in consumer spending reflects a trend where shoppers are prioritizing affordable self-care products over luxury items, indicating a "trading down" behavior that does not feel like a downgrade [2][3] - Ulta's diverse product range, loyalty-driven model, and efficient domestic supply chain are not only defensive assets but also serve as growth engines for the company [3][4] Group 2 - LVMH is facing challenges as demand in Asia declines and U.S. consumers show signs of fatigue, impacting even its flagship brand, Louis Vuitton [4] - In contrast, Ulta is successfully meeting consumer desires for affordable indulgence, positioning itself as a leading player in the beauty industry [4][5] - The current market dynamics suggest that Ulta is not just a trend but a significant movement in the retail space, capturing consumer attention and loyalty [4][5]