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5 Stocks to Buy on a Rebounding Apparel Market

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U.S. retail sales have been somewhat slowing down for the past few months. However, it bounced back in August, as people spent more freely despite fears of surging cases of the Delta variant of coronavirus.

One of the biggest recent beneficiaries has been the apparels industry, which drove a huge part of overall retail sales. In fact, the clothing market has been doing well after a not-so-memorable 2020, with the economy reopening and people stepping out of their homes. 

Apparel Sales Rise  

On Sep 16, the Census Bureau said that retail sales grew 0.7% in August and 15.1% year over year. This was aided by a solid rise in apparel sales. The report said that sales at clothing & clothing accessories stores grew a solid 38.8% on a year-over-year basis in August.

The apparels market was already doing well and is now driving a major part of the overall retail sales. One of the major reasons behind this jump was the back-to-school season. Moreover, people are again planning holidays. This has also seen a surge in apparel sales.

Last year, sales had come to almost a standstill, people spent more on essential goods and cut down on clothes as most entertainment joints and tourist destinations remained closed. According to a recent survey by Sezzle, more than 75% of consumers are spending more on apparel, fashion products and shows than any other category.

Apparel Sales on Growth Track

Although fears of the Delta variant are high, they are a lot more confident now, as millions have been vaccinated now. Also, they are relying more on e-commerce for their purchases.

The majority of apparel sales happened online last year and the trend can be seen this year too. Non-store sales grew 5.5% in August as many people turned to online shopping on fears of COVID-19.

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 expected to cross the $3 trillion mark in the United States by 2030.

Apparel sales are expected to rise further during the upcoming holiday season. According to Mastercard SpendingPulse, holiday season retail sales are projected to grow 7.4%. Last year, holiday sales hit a record high both in terms of dollar gains and percentage points. This year is going to be even better.

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). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Gap, Inc. is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It offers products for men, women, and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix and Hill City brands.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 27.3% over the past 60 days. 

Foot Locker, Inc. (FL - Free Report)  is a retailer of athletic shoes and apparel. The company operates websites and mobile apps, aligned with the brand names of store banners comprising footlocker.com, ladyfootlocker.com, six02.com, kidsfootlocker.com, champssports.com, footaction.com, footlocker.ca, footlocker.eu, footlocker.com.au, sidestep-shoes.com, footlocker.hk, footlocker.sg, and footlocker.my.

As of Jul 31, 2021, the company operated 2,911 stores across 27 countries in North America, Europe, Asia, Australia and New Zealand. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 24.9% over the past 60 days. 

The TJX Companies, Inc. (TJX - Free Report) is a leading off-price retailer of apparel and home fashions in the United States and worldwide. It has more than 4,300 stores across the globe that are well known for their unique value proposition of brand, fashion, price and quality. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 12.6% over the past 60 days. 

Genesco Inc. (GCO - Free Report) sells footwear, headwear and accessories in retail stores in the United States and Canada. The company sells its products principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Head Quarters and Cap Connection, and on Internet websites. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 21.5% over the past 60 days. 

Citi Trends, Inc. (CTRN - Free Report) is a leading value-priced retailer of urban fashion apparel and accessories including nationally recognized brands, private-label products and a limited assortment of home decor items. 

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 30% over the past 60 days.

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