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4 Apparel Picks to Give Your Investment Portfolio a Makeover
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Even as coronavirus-inflicted challenges persist, the Retail - Apparel And Shoes industry is steadily making its way out of the woods and is now set for a complete recovery in 2022. As the economy reopened, the pandemic-induced restrictions eased, and outdoor movement gathered pace. Evidently, the apparel industry blossomed.
Per the Commerce Department, sales at clothing & clothing accessories stores grew 30.6% year over year during February 2022. This followed an increase of 21.4% in January from the prior-year period. Clearly, companies in the apparel space are leaving no stone unturned to tap any surge in demand unless derailed by elevated inflation and looming COVID-19 impacts.
For now, Americans are refreshing their wardrobes thanks to the resumption of active social lifestyles, events and occasions. Industry experts cited that there is a willingness among consumers to spend. We believe that a strong labor market and wage growth have been the major supporting factors. However, some market pundits cautioned that inflation, supply chain bottlenecks, geopolitical tensions and lack of stimulus checks this year could result in some pullback in demand.
Consequently, the industry players have been aggressively adopting strategies and making planned investments to cater to customer demand in-store or online, as well as expediting delivery services. Inventory management, supply-chain enhancement, cost-structure realignment and investment to accelerate digitization are paramount now. Apparel companies are increasing product visibility on online platforms and deepening customer engagement.
Chico's FAS, Inc. deserves mention. This Florida-based fashion retailer’s efforts to become a “digital-first, customer-led” company coupled with a strong portfolio of three unique brands, namely, Chico's, WHBM and Soma, position it well to expand its customer base and gain market share. Product enhancement, planned inventories, operating discipline and marketing strategies help drive full-price selling, lower markdowns and produce higher gross margin.
Chico's has a trailing four-quarter earnings surprise of 298.9%, on average. The Zacks Consensus Estimate for this Zacks Rank #1 company’s current financial year sales and EPS suggests growth of 15.5% and 15%, respectively, from the year-ago period.
Boot Barn Holdings, Inc. (BOOT - Free Report) , the lifestyle retailer of western and work-related footwear, apparel and accessories, is worth betting on. The company has been successfully navigating through the challenging environment, courtesy of merchandising strategies, omni-channel capabilities and better expense management as well as marketing. This, combined with the expansion of the store base, has helped Boot Barn Holdings gain market share and strengthen its position in the industry.
Impressively, Boot Barn Holdings carries a Zacks Rank #2 with an estimated long-term earnings growth rate of 20%. The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period.
You may invest in Capri Holdings Limited (CPRI - Free Report) , the designer, marketer, distributor and retailer of branded apparel and accessories. The company has been reinforcing its position in the luxury fashion space and looks to maximize the potential of Versace, Jimmy Choo and Michael Kors brands through expanded products and categories. Capri Holdings has been investing significantly in digital analytics and upgrading the e-commerce platform.
Capri Holdings’ bottom line has outperformed the Zacks Consensus Estimate by a wide margin in the trailing four quarters. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 53.9%. Meanwhile, the Zacks Consensus Estimate for Capri Holdings’ current financial year sales and EPS suggests growth of 37% and 215.8%, respectively, from the year-ago period.
Tapestry, Inc. (TPR - Free Report) , the provider of luxury accessories and branded lifestyle products, is another potential pick. The company has been benefiting from the successful execution of the Acceleration Program. The program aims to transform the company into a leaner and more responsive organization. It intends to build significant data and analytics capabilities, focusing on enhancing digital and omni-channel capabilities and operating with a clearly defined path and strategy for each of its brands, namely Coach, Kate Spade, and Stuart Weitzman. The company’s brand and digital strength, as well as growth in North America and China, have been tailwinds.
Tapestry has a trailing four-quarter earnings surprise of 28.2%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 10%. The Zacks Consensus Estimate for Tapestry’s current financial year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period.
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4 Apparel Picks to Give Your Investment Portfolio a Makeover
Even as coronavirus-inflicted challenges persist, the Retail - Apparel And Shoes industry is steadily making its way out of the woods and is now set for a complete recovery in 2022. As the economy reopened, the pandemic-induced restrictions eased, and outdoor movement gathered pace. Evidently, the apparel industry blossomed.
Per the Commerce Department, sales at clothing & clothing accessories stores grew 30.6% year over year during February 2022. This followed an increase of 21.4% in January from the prior-year period. Clearly, companies in the apparel space are leaving no stone unturned to tap any surge in demand unless derailed by elevated inflation and looming COVID-19 impacts.
For now, Americans are refreshing their wardrobes thanks to the resumption of active social lifestyles, events and occasions. Industry experts cited that there is a willingness among consumers to spend. We believe that a strong labor market and wage growth have been the major supporting factors. However, some market pundits cautioned that inflation, supply chain bottlenecks, geopolitical tensions and lack of stimulus checks this year could result in some pullback in demand.
Consequently, the industry players have been aggressively adopting strategies and making planned investments to cater to customer demand in-store or online, as well as expediting delivery services. Inventory management, supply-chain enhancement, cost-structure realignment and investment to accelerate digitization are paramount now. Apparel companies are increasing product visibility on online platforms and deepening customer engagement.
That said, we have shortlisted four apparel stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
4 Prominent Picks
Chico's FAS, Inc. deserves mention. This Florida-based fashion retailer’s efforts to become a “digital-first, customer-led” company coupled with a strong portfolio of three unique brands, namely, Chico's, WHBM and Soma, position it well to expand its customer base and gain market share. Product enhancement, planned inventories, operating discipline and marketing strategies help drive full-price selling, lower markdowns and produce higher gross margin.
Chico's has a trailing four-quarter earnings surprise of 298.9%, on average. The Zacks Consensus Estimate for this Zacks Rank #1 company’s current financial year sales and EPS suggests growth of 15.5% and 15%, respectively, from the year-ago period.
Boot Barn Holdings, Inc. (BOOT - Free Report) , the lifestyle retailer of western and work-related footwear, apparel and accessories, is worth betting on. The company has been successfully navigating through the challenging environment, courtesy of merchandising strategies, omni-channel capabilities and better expense management as well as marketing. This, combined with the expansion of the store base, has helped Boot Barn Holdings gain market share and strengthen its position in the industry.
Impressively, Boot Barn Holdings carries a Zacks Rank #2 with an estimated long-term earnings growth rate of 20%. The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period.
You may invest in Capri Holdings Limited (CPRI - Free Report) , the designer, marketer, distributor and retailer of branded apparel and accessories. The company has been reinforcing its position in the luxury fashion space and looks to maximize the potential of Versace, Jimmy Choo and Michael Kors brands through expanded products and categories. Capri Holdings has been investing significantly in digital analytics and upgrading the e-commerce platform.
Capri Holdings’ bottom line has outperformed the Zacks Consensus Estimate by a wide margin in the trailing four quarters. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 53.9%. Meanwhile, the Zacks Consensus Estimate for Capri Holdings’ current financial year sales and EPS suggests growth of 37% and 215.8%, respectively, from the year-ago period.
Tapestry, Inc. (TPR - Free Report) , the provider of luxury accessories and branded lifestyle products, is another potential pick. The company has been benefiting from the successful execution of the Acceleration Program. The program aims to transform the company into a leaner and more responsive organization. It intends to build significant data and analytics capabilities, focusing on enhancing digital and omni-channel capabilities and operating with a clearly defined path and strategy for each of its brands, namely Coach, Kate Spade, and Stuart Weitzman. The company’s brand and digital strength, as well as growth in North America and China, have been tailwinds.
Tapestry has a trailing four-quarter earnings surprise of 28.2%, on average. This Zacks Rank #2 company has an estimated long-term earnings growth rate of 10%. The Zacks Consensus Estimate for Tapestry’s current financial year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period.