Despite Tariffs and Trade Wars, Luxury Brands and Retailers Are Placing Big Bets on the Future

In a surprise move, the fashion and beauty industries are experiencing a surge in mergers and acquisitions, with several major deals announced in recent weeks. Despite the economic uncertainty caused by tariffs and trade wars, luxury brands and retailers are placing big bets on the future, betting that the current market volatility will create opportunities for growth.

The latest deals include Prada Group’s $1.4 billion acquisition of Versace, E.l.f.’s $1 billion buyout of Hailey Bieber’s Rhode, and Skechers’ $9.4 billion sale to private equity firm 3G. These deals are a departure from the usual trend of fashion and beauty companies being cautious in times of economic uncertainty.

Analysts point out that the current market volatility has created a unique opportunity for buyers to acquire luxury brands at a discount. “There are people with enough foresight and risk tolerance to look at dislocation and see uncertainty as creating an opportunity rather than a barrier,” said Simeon Siegel, analyst at BMO Capital Markets.

The buyers behind these deals are not just any ordinary companies. Prada, Dick’s Sporting Goods, and E.l.f. have consistently outperformed their peers in recent years and have accumulated the cash to be able to take a risk by expanding into new categories or markets.

For instance, Prada Group’s acquisition of Versace is seen as a strategic move to strengthen its position in the luxury market. The deal is expected to give Prada access to Versace’s strong brand presence in the US and Europe, as well as its extensive distribution network.

Similarly, E.l.f.’s acquisition of Hailey Bieber’s Rhode is seen as a bold move to expand its presence in the beauty market. The deal is expected to give E.l.f. access to Rhode’s strong brand presence among Gen-Z consumers, as well as its innovative product offerings.

However, not all companies are feeling the same level of confidence. Macy’s cut its annual profit forecast amid tariff uncertainty, while Hudson’s Bay will terminate more than 8,300 workers by Sunday. The department store operator now expects 2025 adjusted profit per share to be between $1.60 and $2, down from its previous target of between $2.05 and $2.25.

Despite the challenges facing some companies, the fashion and beauty industries are expected to continue to grow in the coming months. According to analysts, the deals that have been announced in recent weeks are just the beginning, and more deals are likely to materialize in the coming months.

As the fashion and beauty industries continue to navigate the challenges of tariffs and trade wars, one thing is clear: the current market volatility has created a unique opportunity for growth and expansion. Whether or not these deals will pay off remains to be seen, but one thing is certain – the fashion and beauty industries are not letting economic uncertainty hold them back.

In fact, some companies are even using the current market volatility to their advantage. For example, LVMH’s deputy CEO Stephane Bianchi said that the conglomerate has room to raise prices 2 to 3 percent to offset tariffs. Bianchi also noted that LVMH will continue to invest in China, despite dwindling demand.

Similarly, Italy’s Golden Goose ruled out an IPO this year, but predicted limited impact from tariffs. The luxury sneaker maker’s CEO Silvio Campara said that the company still views a market listing favorably in the future and is open to merger and acquisition options.

As the fashion and beauty industries continue to evolve and adapt to the changing market landscape, one thing is clear: the current market volatility has created a unique opportunity for growth and expansion. Whether or not these deals will pay off remains to be seen, but one thing is certain – the fashion and beauty industries are not letting economic uncertainty hold them back.