The Consumer Products-Discretionary industry remains dynamic, characterized by evolving consumer preferences, economic conditions and ongoing innovation. As the holiday season draws near, companies are navigating a challenging landscape marked by persistent inflation and tariff-driven cost pressures that continue to lift core goods prices. While the Federal Reserve’s September meeting indicates growing consensus for further rate cuts in a softening labor market, inflation worries still weigh on sentiment. Even so, Deloitte’s annual holiday forecast points to resilient consumer spending, albeit at a more measured pace than last year, as shoppers seek value and remain selective in their purchasing decisions.

While challenges persist, companies with strong brand loyalty, pricing power and diversified channels are better positioned to navigate the headwinds. Firms that successfully integrate physical and digital platforms, deliver targeted promotions and maintain efficient supply chains are more likely to capture consumer demand even amid cautious spending. Interparfums, Inc. (IPAR Quick QuoteIPAR - Free Report) , Central Garden & Pet Company (CENT Quick QuoteCENT - Free Report) , The RealReal, Inc. (REAL Quick QuoteREAL - Free Report) and The Honest Company, Inc. (HNST Quick QuoteHNST - Free Report) stand out as strong contenders in this evolving marketplace.

About the Industry

The Consumer Products-Discretionary industry has a direct correlation with the economy, making it cyclical. Discretionary products command high prices, with middle-to-higher-income groups being the targeted customers. The industry comprises companies that offer product categories, including fashion, jewelry and watches, and other home and art products. Quite a few players develop, manufacture, market and sell over-the-counter health and personal care products. Some even manufacture and distribute party goods. Some companies design, source and distribute licensed pop culture products, too. Some industry participants also produce and distribute various products for the lawn and garden and pet supplies markets. Companies sell products to specialty retailers, mass-market retailers and e-commerce sites. 

3 Key Trends to Watch in the Industry

Consumers’ Willingness to Spend: Consumer sentiment remains under pressure as inflationary pressures, still higher interest rates and ongoing economic uncertainties weigh on household budgets. Many shoppers are expected to approach the holiday season cautiously, prioritizing essential purchases over discretionary items and delaying higher-ticket spending. Tariff-driven price increases add further strain, suggesting that overall demand for discretionary products may remain subdued. However, targeted promotions, loyalty programs and value-driven offerings could still encourage selective spending. According to Deloitte, U.S. holiday retail sales are projected to rise between 2.9% and 3.4% during the November-to-January period. This forecast represents a slower growth rate compared to the 4.2% increase experienced last year.

Margins, an Area to Watch: The industry remains highly fragmented, with companies competing to capture market share through price, product offerings and speed to market. To stay ahead, many players have been investing heavily in strengthening their digital ecosystems, which can provide a competitive edge but also come with substantial costs. In addition, rising marketing, advertising and other operational expenses continue to put pressure on margins, while recent product cost inflation adds another layer of challenge. Despite these headwinds, companies are actively pursuing initiatives to mitigate cost pressures, including streamlining operations, optimizing supply chains and implementing more effective pricing strategies.

Brand Enhancement, Capital Discipline: Industry participants have been focusing on deepening consumer engagement, developing innovative products, and enhancing digital and data analytics capabilities. Initiatives such as launching new styles, offering customization, creating unique packaging, improving point-of-sale experiences, leveraging automation, and providing high-end customer service help attract and retain consumers. Efforts to strengthen brand portfolios through marketing campaigns, strategic acquisitions, product innovations and alliances continue to support growth in the sector. At the same time, companies are taking steps to fortify their financial position by efficiently managing inventory, optimizing capital expenditures and improving overall operational efficiency.

Zacks Industry Rank Indicates Bleak Prospects

The Zacks Consumer Products-Discretionary industry is a group within the broader Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #165, which places it in the bottom 32% 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 2025, the industry’s earnings estimate has declined by 21.8%.

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 Versus Broader Market

The Zacks Consumer Products-Discretionary industry has underperformed the broader Zacks Consumer Discretionary sector and the Zacks S&P 500 composite over the past year.

The industry has declined 16.7% over this period against the S&P 500’s rise of 18.4%. Meanwhile, the broader sector has increased 15.9%.

One-Year Price Performance

Industry's Current Valuation

On the basis of forward 12-month price-to-sales (P/S), which is commonly used for valuing consumer discretionary stocks, the industry is currently trading at 2.98X compared with the S&P 500’s 5.40X and the sector’s 2.20X.

Over the last three years, the industry has traded as high as 3.68X and as low as 2.45X, with the median being at 2.92X, as the chart below shows.

Price-to-Sales Ratio (Past 3 Years)

 

4 Stocks to Watch

The Honest Company: The Honest Company is strengthening its business model by executing on strategic transformation pillars of brand maximization and margin enhancement. The brand is uniquely positioned to capture growth in the expansive sensitive skin market, supported by a rigorous "Honest standard of clean" that fosters strong consumer trust and increased customer loyalty. Strategic investments in marketing and omnichannel presence are driving increased product velocities. Through disciplined execution of its turnaround plan, the company has improved operations and positioned itself for long-term success in the conscious consumer goods sector.

This manufacturer and seller of diapers and wipes, skin and personal care, and household and wellness products delivered a trailing four-quarter earnings surprise of 75%, on average. The Zacks Consensus Estimate for The Honest Company’s current financial-year sales and EPS suggests growth of 4.7% and 283.3%, respectively, from the year-ago period. Shares of this Zacks Rank #1 (Strong Buy) company have risen 8.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: HNST

Central Garden & Pet Company: Central Garden & Pet is successfully executing its 'Central to Home' strategy, driving innovation and expanding market share in the Pet and Garden categories. The comprehensive Cost and Simplicity program is driving measurable impact by optimizing its operational footprint, streamlining processes and enhancing the cost structure. Strategic initiatives are focused on targeted investments in digital technology, innovation, and expanding its e-commerce and direct-to-consumer capabilities. This disciplined approach to efficiency and organic growth, coupled with a steady stream of product innovation, is paving the way for a stronger future.

The Zacks Consensus Estimate for Central Garden & Pet Company’s current financial-year EPS suggests growth of 22% from the year-ago period. CENT delivered a trailing four-quarter earnings surprise of 209.3%, on average. Shares of this Zacks Rank #2 (Buy) company have declined 8.3% in the past year.

Price and Consensus: CENT

Interparfums: Interparfums maintains a formidable market position, thanks to a diversified portfolio of prestigious licensed brands, including Jimmy Choo, Montblanc and Lacoste, which demonstrate robust performance and outpace the broader fragrance industry in key regions. Innovation is accelerating with major new launches planned across core franchises and the exciting debut of the new owned brand, Solférino. The company’s disciplined approach to pricing, innovation in artisanal fragrance craftsmanship, and growing e-commerce presence through platforms like Amazon and TikTok underpin its brand strength and reach. With a strong balance sheet and momentum across key markets, Inter Parfums is poised to sustain long-term growth.

This leading global fragrance company has a trailing four-quarter earnings surprise of 3.7%, on average. The Zacks Consensus Estimate for Interparfums’ current financial-year sales and EPS suggests growth of 2.4% and 0.6%, respectively, from the year-ago period. Shares of this Zacks Rank #2 company have declined 22.4% in the past year.

Price and Consensus: IPAR

The RealReal: The RealReal stands out as a clear leader in the luxury resale market, driven by a trusted brand, innovative supply strategies, and a robust platform that resonates especially with Millennials and Gen Z consumers. The company’s focused execution on operational efficiency, underpinned by AI- and automation-led authentication and dynamic pricing, creates a unique strategic moat, consistently improving service quality and scalability. Strategic innovations like drop ship expansion and the Reconsign Program further accelerate supply growth, while experiential events and targeted reinvestments keep both buyer and consignor engagement high. With strong market positioning, a proven growth playbook and relentless commitment to service and technology, The RealReal is exceptionally well-positioned to capitalize on the shift to the circular economy.

The Zacks Consensus Estimate for REAL’s current financial-year sales and EPS suggests growth of 12.3% and 87.9%, respectively, from the year-ago period. REAL registered a positive earnings surprise in the last reported quarter. Shares of this Zacks Rank #3 (Hold) company have zoomed 217% in the past year.

Price and Consensus: REAL