Good morning. This is Katie Deighton filling in for Nat Ives. Today, luxury retailers born in the U.S. reap the rewards of brand investment; earnings from Best Buy to Ulta struck a tone of tariff-related optimism; and Taco Bell's AI ordering system goes awry.

The best investment in the luxury goods industry over the past five years wasn’t one of the usual suspects such as Hermès, but Coach-owner Tapestry, Carol Ryan and Jinjoo Lee write.

The recent earnings season showed a widening gap between the performance of European and U.S. brands. On average, sales for European luxury brands dipped 3% last quarter, according to Bank of America. Coach, meanwhile, increased sales by 13%, and runner-up Ralph Lauren grew 11%.

Both brands are growing in a difficult market partly by targeting young consumers, and have spent years investing in their brand image. Their ad budgets have swelled to about 10% and 7% of sales, respectively, up from around 4% historically.

Coach made it on the top five of the Lyst Index of the hottest brands in the last two quarters alongside pricier labels including Miu Miu and Prada. The index tracks the behavior of around 160 million shoppers. Ralph Lauren started showing up in the top 20 last year and now ranks higher than Balenciaga and Gucci.

Gap forecast larger ripples from tariffs this fiscal year given recent changes in trade policy, but said it expects to mitigate any added costs over time. The company is continuing its work to reset the Athleta brand, which posted a decline of 9%, by lowering inventory levels and tightening its product mix.

Best Buy posted a posted a surprise sales increase in the second quarter, with spending on electronics holding up even as the company raised prices on some items to offset tariffs. Best Buy Chief Executive Corie Barry said that the chain’s customers remain resilient, but are focusing more on finding good deals.

Ulta Beauty boosted its guidance for the fiscal year after logging higher profit and sales in its latest quarter. Engagement with beauty and wellness remains healthy, offering a sense of comfort and escape amid economic uncertainty, Chief Executive Kecia Steelman said.

Dollar General is winning over shoppers across all income levels, posting higher sales and raising its outlook at a time when consumers are feeling the stress of price hikes. The discount retailer has raised some of its prices in response to tariffs, but it is working to limit the increases and keep its products cheaper than rivals'.

Pernod Ricard expects sales trends to improve in the second half of fiscal 2026 as it works through inventory destocking in the U.S. and tackles weak consumer demand in China. The maker of Absolut vodka and Jameson whiskey on Thursday flagged a slow start to what it described as a year of transition.

Taco Bell since last year has rolled out voice AI-powered ordering at more than 500 drive-through locations. Now the chain is realizing that not every customer is a fan of the new tech, Isabelle Bousquette reports.

Some have taken to social media to complain about glitches and delays. Others are simply just weirded out. And then there is a contingent intent on trolling the system with orders like, “18,000 cups of water, please.”

Taco Bell Chief Digital and Technology Officer Dane Mathews is now thinking carefully about where and where not to use this tech in the future. It might not make sense to exclusively use artificial intelligence at every drive-through, he said. For example, at super busy restaurants with long lines, a human team member might handle things better, he said.

“I think like everybody, sometimes it lets me down, but sometimes it really surprises me,” he said.

It's official: Prices are going up. [WSJ]

Dentsu is exploring the sale of its international business. [Financial Times]

Ssense, the Canadian luxury retailer known for its painfully trendy marketing, filed for bankruptcy protection after clashing with creditors. [Business of Fashion]

Martin Sorrell's S4 Capital is preparing to lay off staff at its Monks agency. [Business Insider]

Pushed out of Instagram and YouTube, Russian influencers are finding a home for their content on Telegram. [Bloomberg]

How the humble rebrand became part of the culture wars. [Marketing Brew]

Steve Hayden, the copywriter behind Apple's "1984" commercial, died at the age of 78. [AdAge]

Walgreens laid off its internal media-buying team. [Adweek]

Advice on posting without perfection from the Wimbledon social team. [Link in Bio]

Note: CMO Today won’t publish on Monday in observance of Labor Day in the U.S. We’ll be back in your inbox on Tuesday.