The Retail - Apparel And Shoes industry, once a cornerstone of consumer spending and fashion trends, is currently navigating a challenging landscape. Fluctuating consumer confidence, driven by underlying inflationary pressures, has significantly altered spending patterns. With disposable incomes shrinking, consumers are prioritizing essential items, causing demand for apparel and footwear to weaken. Simultaneously, retailers are grappling with rising operational costs, including increased wages and higher prices for goods and services, exacerbated by ongoing tariffs. This combination of soft demand and rising expenses continues to strain margins and weigh on the industry’s near-term outlook. Efforts to pass these added costs onto consumers have only intensified the challenges for retailers.

Nonetheless, industry participants are proactively adapting to the shifting consumer landscape by focusing on robust product strategies, advancing omnichannel capabilities, making prudent capital investments and expanding their customer reach. These initiatives enable retailers to stay competitive and effectively meet evolving consumer demands, positioning them for continued success despite market challenges. Backed by these initiatives, companies like Levi Strauss & Co. (LEVI Quick QuoteLEVI - Free Report) , Urban Outfitters, Inc. (URBN Quick QuoteURBN - Free Report) , Boot Barn Holdings, Inc. (BOOT Quick QuoteBOOT - Free Report) and Stitch Fix, Inc. (SFIX Quick QuoteSFIX - Free Report) are better placed.

About the Industry

The Retail - Apparel & Shoes industry encompasses the manufacturing, distribution and retailing of clothing, footwear and accessories. The industry is influenced by various factors, including fashion trends, consumer spending habits, economic dynamics and seasonal variations. Companies within the industry range from global apparel giants to domestic brands, each targeting specific market segments. The industry presents both opportunities and challenges. On one hand, it demands continuous product innovation, brand distinctiveness and effective marketing to attract customers. On the other hand, fierce competition and price sensitivity pose hurdles. Technological advancements and the rise of online retail have revolutionized the industry, with consumers increasingly seeking convenience and personalized shopping experiences.

4 Key Trends to Watch in the Industry

Soft Demand May Hit Revenues: Underlying inflationary pressures and geopolitical tensions are weighing on consumer spending, a critical driver for the retail sector. The industry’s outlook is increasingly tied to consumer purchasing power, which is being strained by rising prices, squeezing family budgets and weakening demand. This shift is reflected in declining consumer sentiment, with the Conference Board's Consumer Confidence Index falling to 93.0 in June from 98.4 in May, a clear sign of growing unease over job security and financial stability.

Pressure on Margins to Linger: The retail apparel and shoes industry is highly competitive, with companies battling for market share through pricing, product offerings and speed to market. To stay ahead, many players have been heavily investing in digital infrastructure and enhancing delivery capabilities. While these initiatives drive sales, they come with substantial costs. Increased spending on marketing, advertising and store operations is putting further pressure on margins. However, companies are actively working to offset these challenges by streamlining operations, optimizing supply chains and implementing strategic pricing strategies.

Brand Enhancement & Capital Discipline: Industry players are increasingly focused on deepening consumer engagement through innovative products, personalized experiences, and enhanced digital and data analytics capabilities. The introduction of new styles, customization options and revamped store environments is designed to attract and retain shoppers. Efforts to strengthen brand portfolios through targeted marketing, strategic acquisitions, innovation and partnerships are expected to continue supporting growth in the sector. Additionally, companies are taking steps to bolster their financial health, including managing inventory more effectively, closing underperforming stores, optimizing capital expenditures and improving operational efficiency.

Diversification & Digitization Key to Growth: As consumer shopping behaviors evolve, companies are adapting by integrating both in-store and online operations. They are developing omnichannel capabilities, implementing loyalty and marketing programs, and enhancing supply chains to offer faster delivery options, such as doorstep delivery, curbside pickup, and buy online, pick up in-store. At the same time, investments in store renovations, improved checkout processes and mobile point-of-sale systems are helping maintain relevance. To align with consumer preferences and the shift toward online shopping, companies are continually replenishing shelves with popular merchandise and increasing investments in digital technologies.

Zacks Industry Rank Indicates Bleak Prospects

The Zacks Retail - Apparel And Shoes industry is a group within the broader Zacks Retail – Wholesale sector. The industry currently carries a Zacks Industry Rank #212, which places it in the bottom 13% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates drab near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. 

The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. Since the beginning of February 2025, the industry’s earnings estimate has declined 14.1%.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.

Industry vs. Broader Market

The Zacks Retail - Apparel And Shoes industry has underperformed both the broader Zacks Retail-Wholesale sector and the Zacks S&P 500 composite over the past year.

The industry has advanced 11.6% over this period compared with the S&P 500’s growth of 17.3%. Meanwhile, the broader sector has risen 23.7%.

One-Year Price Performance

Industry's Current Valuation

Based on the forward 12-month price-to-earnings (P/E), which is commonly used for valuing retail stocks, the industry is currently trading at 18.26X compared with the S&P 500’s 22.74X and the sector’s 25.50X.

Over the last five years, the industry has traded as high as 28.34X and as low as 10.10X, with the median being at 16.66X, as the chart below shows.

Price-to-Earnings Ratio (Past 5 Years)

4 Stocks Worth Considering

Levi Strauss: Levi Strauss is accelerating its transformation into a direct-to-consumer (DTC) lifestyle apparel leader with compelling brand momentum. The Levi’s brand remains globally iconic, with strong performance across categories like denim, tops and outerwear, supported by expanding collaborations and cultural marketing. Strategic focus on innovation, operational discipline, and premium product positioning continues to drive growth and margin improvement. As Levi leans into DTC, global expansion and category leadership, it is well-positioned for long-term value creation.

The Zacks Consensus Estimate for Levi Strauss’ current fiscal earnings per share (EPS) suggests growth of 4% from the year-ago reported figure. This global leader in jeanswear and a major apparel company has an average trailing four-quarter earnings surprise of 25.9%. Shares of this Zacks Rank #1 (Strong Buy) company have risen 21.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: LEVI

Urban Outfitters: Urban Outfitters is leveraging a diversified brand portfolio and multi-channel strength to drive record-breaking growth. Anthropologie and Free People are delivering standout performances across retail and wholesale, supported by innovative product assortments and expanding customer reach. The company’s rental platform, Nuuly, is scaling rapidly and contributing meaningfully to profitability. With strong momentum across all banners and a disciplined operating model, URBN is well-positioned to sustain growth across retail, digital and subscription channels.

This leading lifestyle products and services company, which operates a portfolio of global consumer brands, has an average trailing four-quarter earnings surprise of 29%. The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and EPS suggests growth of 8.5% and 22.2% from the year-ago period. Shares of this Zacks Rank #2 (Buy) company have surged 72.5% in the past year.

Price and Consensus: URBN

Stitch Fix: Stitch Fix is showing early signs of a successful turnaround, underpinned by improving client metrics, product innovation and enhanced personalization. The company’s curated styling experience and growing flexibility are resonating with higher-value customers and supporting improved average order values. Ongoing transformation efforts are strengthening assortment, deepening client engagement and aligning operations for scalable growth. With a renewed strategic focus and differentiated service model, Stitch Fix is laying the groundwork for a more resilient and profitable future.

This leading online personal styling service delivered a trailing four-quarter earnings surprise of 51.4%, on average. The Zacks Consensus Estimate for Stitch Fix’s current financial-year EPS suggests growth of 71.7% from the year-ago period. Shares of this Zacks Rank #2 company have rallied 14.3% in the past year.

Price and Consensus: SFIX

Boot Barn Holdings: Boot Barn’s disciplined execution and strong retail fundamentals are powering impressive same-store and new-store performance across the country. Exclusive brand penetration and merchandise margin expansion continue to elevate profitability, while omnichannel strength reinforces brand equity. Strategic geographic growth, deep customer loyalty and a focus on full-price selling highlight the company’s operational excellence. As Boot Barn scales its footprint and leverages vertical integration, it remains poised for sustained and profitable expansion.

Boot Barn, a lifestyle retailer of western and work-related footwear, apparel and accessories for men, women and children, has an average trailing four-quarter earnings surprise of 3.4%. The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS suggests growth of 11.8% and 7.6% from the year-ago period. Shares of this Zacks Rank #3 (Hold) company have advanced 41.4% in the past year.

Price and Consensus: BOOT