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4 Apparel Stocks to Buy Ahead of the Holiday Season

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The apparel market is fast getting back on its feet after taking a hit last year due to the pandemic. The economy is finally reopening and with the holiday season around the corner, predictions are that travel and vacationing will see a massive jump.

All big apparel makers have started gearing up for the holiday rush. Although apparel retailers are struggling with the highest out-of-stock levels, we still expect big brands like Levi Strauss & Co. (LEVI - Free Report) , Boot Barn Holdings, Inc. (BOOT - Free Report) , Capri Holdings (CPRI - Free Report) and Canada Goose (GOOS - Free Report) to gain this holiday season.

Apparel Makers Struggling to Meet Demand

According to a new report from Adobe, out of the 18 retail categories it tracks, apparel has the highest out-of-stock levels currently. This is followed by sporting goods and baby products.

Many customers are thus banking on second-hand apparel retailers. The apparel market was slowly getting back on its feet as the economy started reopening but with more restrictions now lifted, people have started planning vacations. This has worked miracles for the apparel industry.

A separate report from Rakuten Intelligence predicts that apparel sales are expected to rise 30% year over year in the fourth quarter. The increase will primarily stem from more spending on winter and fall apparel.

Holiday Season to Boost Apparel Sales

The holiday season has always been important for retailers and this year is expected to be even better. The NPD Group predicts a massive jump in apparel sales during the holiday season. Per the report, 61% of the respondents said they need a wardrobe revamp as their clothes are worn out.

The report further mentions that the apparel market is on track to surpass the pre-pandemic sales level of 2019. Apparel generated $13.3 million more in sales in the first eight months of the year than in 2019, indicating that it is on track for a fast recovery.

Also, with personal spending increasing and household savings at a record high, people are likely to shell out more on apparel during the holiday season.

Our Choices

Given this scenario, it would be prudent to invest in these four 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.

Levi Strauss & Co. 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. 

Following the pandemic, Levi Strauss has shifted focus on its e-commerce division. In 2021, 25% of the company’s total sales came from online shopping. After opening 100 new stores in 2020, the company plans to open another 100 this year. The new stores will allow customers to use the Levi app to shop and then benefitfrom both curbside pick-ups and contactless returns.

Levi Strauss’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 7.4% over the past 60 days. Levi Strauss carriesa Zacks Rank #2.

Boot Barn Holdingsoperates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. The company's products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories.

Boot Barn Holdings has been focusing on the expansion of its store base, which has been helping the company to gain market share and strengthening its position in the industry. The company recently reported impressive quarterly results. BOOT reported second-quarter fiscal 2022 earnings of $1.22 per share, beating the Zacks Consensus Estimate of 94 cents. 

Boot Barn Holding’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 23.6% over the past 60 days. Boot Barn Holdings carries a Zacks Rank #1.

Capri Holdings provides women’s and men’s accessories, footwear and ready-to-wear, as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. CPRI operates in the global personal luxury goods industry, which has been severely impacted by the outbreak of the coronavirus.

Capri Holdings had an impressive last quarter. The company reported second-quarter fiscal 2022 adjusted earnings of $1.53 per share, beating the Zacks Consensus Estimates of 95 cents.

Capri Holdings’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 15.2% over the past 60 days. Capri Holdingssports a Zacks Rank #1.

Canada Goose is a global outerwear brand which designs, manufactures, distributes and retails premium outerwear for men, women and children. The company's jackets are sold in 36 countries around the world, including in two owned retail stores and four e-commerce stores.

The company’s expected earnings growth rate for the current year is 55.7%. The Zacks Consensus Estimate for current-year earnings improved 9.2% over the past 60 days. GOOS sports a Zacks Rank #1.