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Apparel Sales Roaring Back to Pre-Pandemic Highs: 5 Winners

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Apparel sales are on the rise again as restrictions further get eased, and more people step out and make plans for holidays. Apparel sales had taken a massive hit last year as people mostly stayed indoors and spent less on buying.

However, things are changing with more people getting vaccinated. Americans are now aggressively spending on clothes and accessories, driving overall retail sales.

Apparel Sales on the Rise

With more people traveling and several others making plans for holidays, sales of apparel and clothing accessories are once again on the rise. According to the latest Mastercard SpendingPulse report, apparel sales grew a whopping 62.9% year over year in June.

The segment had come taken a bad hit last year, with storesclosing down and sales coming almost to a standstill. Even as the economy reopened, sales remained low as restrictions on travel and public places continued.

However, things started changing from the beginning of this year as more people started getting vaccinated. The direct impact of this was felt on apparel sales, which finally perked up. June growth is 12.7% higher than the same period in 2019, which proves that sales are now higher than the pre-pandemic era.

Apparel Market Poised to Grow

E-commerce played a major role in saving not only the apparel industry but the overall retail sector during the pandemic. The majority of the apparel sales last year happened online. 

According to Statista, the U.S. apparel market was valued at$368 billion in 2019. That year,global apparel and footwear sales reached $1.9 trillion and are now expected to cross the $3 trillion mark in the United States by 2030.

This rise will is projected to be driven by e-commerce. According to a report from Retail Dive, the trend of shopping apparel online grew 30% in 2020, the fastest since 2002. This was obviously due to the pandemic. In fact, apparel, footwear and accessories comprised 19% of the overall U.S. e-commerce sales in 2020, despite overall sales in the category declining due to the pandemic.

According to the report, online clothing sales are now expected to reach 47.5% by 2024.

Moreover, despite the pandemic disrupting sales, the market is expected to grow at a rapid pace. According to another Mastercard SpendingPulse report, apparel sales during the back-to-school season are projected to jump 78.2% on a year-over-year basis. The back-to-school season is typically considered as the period between Jul 15 and Sep 6.

Our Choices

Given this scenario, it would be prudent to invest in these five apparel stocks. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie & Fitch Company (ANF - Free Report) operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids through a network of approximately 850 stores across North America, Europe, Asia and the Middle East.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 88.1% over the past 30 days. The company sports a Zacks Rank #1.

Buckle, Inc. The (BKE - Free Report) markets a wide selection of brand names and private label casual apparel, including denim, other casual bottoms, tops, sportswear, outerwear, accessories and footwear. 

The company’s expected earnings growth rate for the current year is 41%. The Zacks Consensus Estimate for current-year earnings has improved 25% over the past 30 days. The company sports a Zacks Rank #1.

L Brands, Inc. evolved from an apparel-based specialty retailer to a segment leader focused on women’s intimate and other apparel, personal care, beauty and home fragrance products. 

The company’s expected earnings growth rate for the current year is 67.3%. The Zacks Consensus Estimate for current-year earnings has improved 8.2% over the past 60 days. L Brands has a Zacks Rank #2.

Urban Outfitters, Inc. (URBN - Free Report) is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home decor and gift products. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 83.6% over the past 60 days. Urban Outfitters carries a Zacks Rank #1

Levi Strauss & Co. (LEVI - Free Report) designs and markets jeans, casual wear and related accessories for men, women and children under the Levi's, Dockers, Signature by Levi Strauss & Co. and Denizen brands. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 14.4% over the past 60 days. Levi Strauss sports a Zacks Rank #1.