Luxury Brands Are in a Winner-Takes-All Phase

Louis Vuitton’s owner designed the medals for the Paris Olympic Games. It can’t be easy to see rival Hermès make off with gold in the second-quarter sales heat.

France’s three most powerful luxury-goods companies reported very mixed second-quarter results last week. On Tuesday, LVMH Moët Hennessy Louis Vuitton said sales in the three months through June rose by a disappointing 1% compared with the same period last year. Gucci owner Kering followed with an 11% fall for the quarter and issued a profit warning. Hermès left its competitors in the dust with a 13% increase in sales over the same period.

Hermès captured more than 100% of the incremental growth in the industry in the latest quarter. Luxury shoppers spent €440 million—equivalent to $477.6 million at current exchange rates—more in the French brand’s stores than they did in the same period of last year. They spent €400 million less on all other luxury brands combined, based on analysis by Bank of America.

This points to a double whammy for high-end brands, which face challenges at both ends of the consumer spectrum they serve.

It has been clear for months that middle-class shoppers in the U.S. and China, the luxury industry’s two most important markets, have reined in their purchasing.

Chinese consumers are saving rather than spending because the value of their homes is falling. Lower-income and middle-income Americans who developed a taste for luxury during the pandemic have pulled back sharply as they have burned through excess savings.

Now, wealthy consumers, too, seem to be getting choosier about which brands they will and won’t buy. Hermès Chief Executive Axel Dumas said there is a “flight to quality” under way in the luxury industry. This shift is benefiting the Birkin handbag maker , which has a reputation for timeless designs.

Chinese buyers in particular are avoiding flashy and logo-heavy brands as worries about the country’s economy and real-estate challenges grow.

Jewellery sales are also holding up as shoppers look for goods that are more likely to hold their value than clothing or handbags. Cartier’s owner Richemont said its jewellery sales rose 4% in the quarter, although the company’s overall sales were weighed down by weak demand for its watch and fashion brands. Kering jewellery labels Boucheron and Pomellato were rare bright spots in its portfolio.

The outlook is harsh for brands such as Gucci and Burberry that are in turnaround mode. The latter issued a profit warning earlier this month and replaced its CEO in an admission that a years-long push to make the British trench-coat maker more exclusive had failed. Its shares have fallen to levels not seen since 2010.

Both brands face an uphill battle to lure shoppers. Neither Gucci nor Burberry is known for the classic designs now in vogue. The labels might also have exacerbated the slump, as the sharp price increases that luxury brands implemented in recent years have sidelined aspirational shoppers.

Luxury stocks are diverging. Shares in Richemont and Hermès have gained 15% and 8% respectively so far this year, with everyone else in the red.

Investors are taking their cue from wealthy shoppers: In troubled times, the most exclusive brands are the safest bet.

Gold is one of the market’s go-to hedges in rocky times. Don’t forget that gold miners’ stocks are too.

The stock market’s gains in 2026 belie the rocky macroeconomic picture: elevated inflation, heightened geopolitical tensions, and jitters about the artificial-intelligence trade. That backdrop, in theory, should be the time for gold to shine. Instead, the price of the yellow metal has tumbled more than 5% so far, after last year’s blistering 65% rally. In part, the U.S. dollar’s recovery has stymied gold, which benefited from the greenback’s weakness in 2025.

Even with the precious metal’s recent weakness, gold mining stocks could be the best way to profit from this year’s uncertainty.

Gold miners “are a valuable hedge against macro risks that would likely be damaging for equities,” BCA Research’s Noah Weisberger and Rishabh Shah wrote this week.

Concerns about the Federal Reserve’s next moves to tackle inflation, the increasingly crowded AI trade, and steep valuations for tech stocks are just some of the drivers that could help gold’s price get on even footing— and lead to even bigger gains for miner stocks.

These stocks’ prices tend to outpace gold’s moves, because the companies have fixed operational costs. So when gold’s price rallies, their profit margins soar, and vice versa. For instance, the VanEck Gold Miners GDX +7.39% exchange-traded fund has fallen 11% this year as the metal has slumped.

Now, gold’s price just needs to stabilize to help miners’ stocks take off, and that seems to be happening. The precious metal has recently found support above the $4,000 level, and has stuck in a narrow range since the end of June. But its price rose ever so slightly in July, ending a four-month losing streak for the metal. Technical analysis also suggests that gold is due for a comeback.

Barron’s recently wrote that the pullbacks for both gold miners and the metal itself are overdone. Senior technical analyst Doug Busch noted that the VanEck ETF is on the “verge of a breakout” and has the potential to hit $11o in early 2027, up more than 40% from its current price.

Gold miners also have more than their role as a market hedge going for them. Their fundamentals are solid, too, says Chris Mancini, portfolio co-manager of the Gabelli Gold Fund.

“Precious metals miners are generating substantial amounts of free cash flow given profit margins of over $2,000 per ounce, and are returning this cash to shareholders through buybacks and dividends,” he said in an email.

“Buying the miners is a cheap way to get exposure to the price of gold,” he added. His fund owns Newmont NEM +6.71%, a Barron’s stock pick last year, and Agnico Eagle Mines as top holdings, as well as miners Northern Star Resources, Endeavour Mining, and Kinross Gold K+8.59%.

Miners are better businesses than they used to be, the BCA team added.

“Capex is more disciplined, margins are high and rising…and they are largely independent of the AI story,” Weisberger, BCA’s head of equities, and Shah, a senior analyst, wrote.

That last part is key. AI is disrupting the software industry and many other services and information-oriented businesses, and investors have piled into AI stocks. But ChatGPT, Claude, Grok, and other large-language models aren’t going to replace the need to mine for metals.

“Equity portfolios can benefit from exposure to quality that is uncorrelated to AI risk, and gold miners fit the bill,” the BCA team said.

They recommend that investors buy the VanEck Gold Miners ETF, which owns top miners such as Agnico, Barrick Mining ABX +7.24%, and Newmont.

An important bonus for big gold miners’ stocks is that their valuations are attractive after the gold’s pullback, too. The VanEck ETF is now trading at just a little more than nine times next year’s earnings estimates. That’s a big discount to its five-year average price-to-earnings ratio of 14, according to FactSet.

What’s more, the ETF is currently valued at a more than 50% discount to the S&P 500 SPX -0.17%, which is trading for about 19 times earnings estimates for 2027. Mining stocks have typically traded at just a 25% discount to the broader market over the past five years. So there is significant upside for the group if valuations move back toward normal levels.

One factor that complicates mining stocks as a market hedge, of course, is if stocks bounce back, which has been the case so far in August.

But both the market and economic outlooks remain cloudy, and investors remain nervous about the Fed’s next moves and AI stocks. Gold miners should do just fine, even if the anxious mood on Wall Street persists.

Luxury Brands Are in a Winner-Takes-All Phase

Hermès captured the lion’s share of growth in luxury-goods spending in the second quarter, while everyone else lagged behind