Agenda-setting intelligence, analysis and advice for the global fashion community.
Happy one month Liberation Day anniversary! Celebrations will include a host of economic indicators that are likely to come in various shades of bleak, and, for counter-programming, updates from two of fashion’s hottest brands.
We’ll start with the bad news. The Conference Board’s closely watched consumer confidence index, out April 29, is expected to fall to its lowest level since the spring of 2021, when the rollout of Covid vaccines was just beginning to revive the US economy. A day later comes the US first-quarter gross domestic product reading, with economists’ forecasts coalescing around meagre growth of 0.4 percent, according to a Wall Street Journal poll.
The tariffs’ impact is clear: a January survey found the consensus expectation for 1.7 percent growth in the first quarter, while consumer confidence at that time was also hovering close to the post-pandemic norm.
These indicators are particularly concerning as they are expected to reveal a pullback in spending by consumers and businesses even before the full effect of the tariffs kick in. While some brands have raised prices, others are running through inventory brought in pre-tariff and hoping trade deals head off the worst of what was announced on April 2. Meanwhile, the closure of the “de minimis” loophole on May 2 threatens to increase the cost and complexity of shipping e-commerce orders from China overnight.
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Brands that sell products people want to buy, even at higher prices, will have an easier time of it. That will be evident on April 29, when Adidas executives speak to analysts about their stellar first-quarter results. And then we’ll see it again a day later, when Prada Group gets another chance to brag about Miu Miu’s explosive growth, even in the midst of a global luxury downturn.
Last week, Adidas reported a 13 percent jump in first-quarter sales, to €6.2 billion ($7.1 billion), on the strength of its Sambas and other retro styles. The company is grabbing market share from Nike among casual sneaker wearers, and is making a play for other categories, including running. Tuesday’s call will provide an opportunity for the company to lay out its thinking on tariffs; Adidas and other footwear brands would be hit hard if a 46 percent tariff on Vietnamese imports were to go into effect. Notably, Adidas’ first-quarter results did not come with an outlook for the rest of the year.
In March, Prada reported 93 percent growth for Miu Miu in 2024, which represented an acceleration from the previous year’s 58 percent increase. The group has increasingly relied on Miu Miu to drive growth as Prada’s expansion has slowed (sales were up 4 percent year on year in the fourth quarter). Still, the biggest question around the company this week is how it will integrate Versace. Turning around a struggling brand in the middle of a trade war and a luxury slowdown is not easy, especially when Prada and even Miu Miu will need extra attention to power through this tumultuous period.
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