Hey Snackers,
Happy Met Gala Day! Did you know it can cost six figures for VIPs to attend the high-profile event? Think: custom couture, glam teams, and a little propranolol to keep from sweating on the carpet. (Not to mention the cost of the ticket itself — after all it is a benefit!)
In today’s special Business of Fashion edition: retailers are deep in their tariff era. From shrinking margins to luxury slowdowns, we’re breaking down how some of the biggest names in the game are feeling the squeeze.
Before we dig in, let’s talk about last week in the markets. Confirmation that China is open to trade talks with the US along with better-than-expected US job growth in April fueled another day of gains for stocks, with the S&P 500 up 1.5%, the Nasdaq 100 gaining 1.6%, and the Russell 2000 booking a 2.3% advance. The S&P 500 has now reclaimed all of its losses since the April 2 reciprocal tariffs announcement.
❓ Haute or not? Test your knowledge with our Snacks Seven Quiz. Here’s the first Q:
Which retailer cited a “lack of seasonal purchasing” due to “mild weather” for why it lost market share in the UK?
Luxury’s glow dims, pushing designers to refresh or get left behind
After nearly tripling its economic profit from 2019 to 2024, the global luxury market hit a snag last year, shedding nearly 50 million shoppers. In China, once the industry’s shining star, luxury sales dropped 18% to 20% as shoppers shifted their focus abroad and consumer confidence took a hit. Meanwhile, in the West, many aspirational buyers are keeping a tighter grip on their wallets as savings run dry and worries about inflation and tariff-induced price hikes grow. Now, some of luxury’s biggest players are starting to feel the pinch:
LVMH, owner of over 75 brands including Louis Vuitton, Dior, and Tiffany, posted revenues of $23 billion for the first quarter of the year, a 2% drop year over year, as demand cooled in the US and Japan for its fashion and leather — not to mention the drink that makes up the “M” in its name.
Kering has had an even rougher ride and reported dismal Q1 sales. Gucci, Kering’s top brand, saw revenue plunge 25%, with steep drops in the US and Asia as the brand struggled to connect with high-end buyers. In a bid to revive Gucci’s buzz, it tapped a controversial new artistic director, which didn’t go great for the stock.
Hermès stayed in its own stratosphere, posting record Q4 revenue of $4.15 billion. The premium luxury giant now plans to hike US prices to fully offset President Trump’s tariffs, as demand for its iconic $15,000 Birkin bags and $1,000 belts continues to outstrip supply, despite copycats trying to muscle into its leather domain.
Luxury is in reboot mode. With shoppers more selective as tariffs loom, legacy houses are betting on creative overhauls to keep their brands rare and relevant. The pressure is on: creative director tenures are now shorter than ever, sometimes lasting just a season. While unlikely to upend the entire industry, the narrative is clearly shifting. Analysts now expect the global luxury market to shrink by 2% this year, a sharp U-turn from the 5% growth previously forecast.
Invest in the Pre-IPO Market Amid Public Market Uncertainty
Tariffs, emptier ports, market volatility. Amidst public market uncertainty, private markets are expected to continue growing, and are projected to hit $18T+ by 2027.¹ And yet, the big players have been the ones reaping the rewards of these opportunities, leaving out everyday investors like you.
Enter StartEngine, the platform connecting accredited individuals with top pre-IPO companies like OpenAI, Perplexity, and Databricks.
While uncertainty reigns, StartEngine just posted recent financials.
🌴Record Q4 2024 revenues of $17M
🌴 Revenue doubled YoY ($23M to $48M)2
Note: net loss also increased to $16.5 million.
The even better part? The window is open to invest in them directly. Join 45K+ who have invested $84M+ in StartEngine (across all offerings) before this round closes next month.3
Retailers brace for supply chain whiplash as tariffs go into full effect
Retailers are scrambling to rethink sourcing, pricing, and survival strategies as tariffs kick in. About 97% of the clothes and shoes sold in the US are imported, with China being the largest source. Since the ’90s, US brands have shifted manufacturing to low-wage countries like China, Vietnam, and Bangladesh to keep costs down. But even that diversification hasn’t shielded them from recent tariff hikes, including up to 145% on Chinese goods. Analysts expect retailers to get hit hard by tariffs, with rising costs and shrinking margins forcing them to raise prices as consumers are already tightening their belts.
So far…
Nike saw more than $12 billion in market value swoosh away as investors fretted over the sneaker giant’s inventory pileups and tariffs hitting its key manufacturing hubs in China, Vietnam, and Indonesia.
Victoria’s Secret warned last month that 10% tariffs on Chinese imports could cost $10 million to $20 million in operating income. With those levies now at 145%, the impact is now likely to be far worse.
Levi’s tried to downplay tariff troubles, as most of the denim giant’s spring and summer products are already in the US, limiting near-term margin pressure. But the supply chain of those “American” jeans involves Vietnam, Sri Lanka, and of course China.
More optimistically… analysts expect off-price retailers like TJX and Burlington Coat Factory to weather the tariff storm better since they typically stock up on merchandise that retailers already imported.
It’s a race against the clock. Retailers that have placed orders are watching them sit in Chinese ports while they wait to see how the tariffs shake out. We’re also about to see imports arriving at US ports from China fall off a cliff, which means stores risk running out of stock just as consumers begin shopping for back-to-school materials and then the holidays. Wall Street is feeling the heat: the SPDR Retail ETF is down 12% this year, and the consumer discretionary sector, which includes retailers like Nordstrom and Foot Locker, is the worst-performing S&P 500 sector year to date.
The end of de minimis could mean the end of cheap clothing imports
When the clock struck midnight last Friday, the de minimis tariff exception came to an end, disappearing like Cinderella’s gown after the ball. The rule allowed small shipments of goods worth less than $800 to enter the US duty free, but now millions of packages, many of which contain low-cost clothes from China, will be subject to the same tariffs applied to general goods. Until now, this allowed the clothing costs to be one of the few categories that have bucked the trend of consistently rising prices since the 1990s.
Why Stick To Stocks On the Public Market?
Amid public market turbulence, private markets are set to top $18T by 20271. But everyday investors have been left out of these potential gains. Enter StartEngine, the platform that posted record Q4 revenues by connecting accredited investors with top pre-IPO companies.2
Join 45K+ shareholders (across all offerings) before this round closes next month.3
Off the Charts
Searches for which retailer peaked around Christmas 2012 and have been tapering off ever since?
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What else we're Snackin'
Who’s where: a creative director cheat sheet for 2025
Chinese manufacturers are fueling consumer skepticism on social media. Viral exposés break down the “real” cost of luxury goods — and even offer direct lines of purchase
Temu will stop selling goods from China directly to US customers as the de minimis shipping exception comes to a close
Private investing is booming amid market uncertainty. And yet,everyday investors have been left behind — until now.¹ StartEngine is connecting accredited investors with recognized pre-IPO companies. Join 45K+ investors (across all offerings) before this round closes next month.3
Snack Fact of the Day
Europe makes up about 70% of the global luxury goods market.
This Week
April ISM Services PMI. Earnings expected from Palantir, Hims & Hers, Ford, and Tyson Foods
Earnings expected from Marriott, Rivian, Super Micro Computer, Celsius, Ferrari, Electronic Arts, and Wynn Resorts
Fed interest rate decision. Earnings expected from Novo Nordisk, Uber, AppLovin, Arm, AMC, DoorDash, Occidental Petroleum, Carvana, Vistra, Axon, and Disney
Earnings expected from ConocoPhillips, Expedia, Anheuser-Busch, Shopify, Warner Bros. Discovery, Coinbase, Lyft, Peloton, Paramount, DraftKings, SoundHound, D-Wave Quantum, Affirm, MARA Holdings, News Corp, Rocket Lab, Monster Beverage, and Match Group
Earnings expected from Plug Power
¹ Source: S&P Global, “Private Markets – A Growing, Alternative Asset Class,” Accessed April 30, 2024
² Based on our 2024 Form 10-K. This revenue growth has been driven by StartEngine Private, a new product line that offers funds in late stage companies. This product line has driven over $28 million of the $48 million in revenue from 2024. Net loss also increased to $16.5 million. To understand the impact on margins, see financials.
³ This is a paid advertisement for StartEngine’s Reg. A+ offering. Please read the most recent offering circular and related risks at StartEngine OWN. The offering is made available through StartEngine Crowdfunding, Inc. No broker-dealer or intermediary was involved in offering.
Past performance is no guarantee of future results. Investing in private company securities is not suitable for all investors. This investment is highly speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment. There is no guarantee that a market will develop for such securities.
⁴ Kevin O’Leary is a paid spokesperson for StartEngine. See his 17(b) disclosure, here.