As the quarterly earnings season gathers pace, investor focus is turning toward the apparel space, where companies are showing resilience despite cautious discretionary spending, tariff-related cost pressures and fast-changing fashion preferences. Consumers remain selective, but demand has held up for brands offering compelling assortments, strong value propositions and differentiated customer engagement. 

Per the latest Zacks Earnings Outlook, the Retail – Wholesale sector (which houses Retail – Apparel and Shoes stocks) is likely to witness bottom-line growth of 2% this earnings season, with revenues expected to increase 7.9%.

Key Apparel Trends This Earnings Season

This earnings season, several apparel players are benefiting from improved product acceptance, disciplined inventory management and lower promotional activity. Many companies have been driving higher full-price selling, refining pricing architectures and strengthening brand relevance through targeted marketing, social media engagement and product innovation. These efforts are helping support merchandise margins and improve overall business quality despite industry-wide cost pressures.

Tariffs and sourcing-related expenses remain key watchpoints. Companies with diversified sourcing strategies, selective pricing actions and tighter expense controls appear better positioned to protect profitability. At the same time, supply-chain efficiencies, better inventory alignment and reduced markdown dependency are helping stabilize margin trends heading into earnings.

Another encouraging trend is the growing emphasis on customer engagement and category expansion. Apparel retailers are increasingly leveraging loyalty programs, digital capabilities, influencer marketing and localized assortments to deepen customer relationships and drive traffic. Several players are also pursuing opportunities in adjacent categories, international markets and newer customer cohorts, particularly younger shoppers seeking trend-right products at accessible price points.

Although macroeconomic uncertainty and uneven consumer demand continue to create volatility, operational discipline and sharper execution are emerging as important differentiators. Companies balancing innovation, inventory control and margin management may be better positioned to outperform expectations this season.

Finding the Right Stocks

Identifying likely earnings outperformers is not easy, but our proprietary methodology helps narrow the field. With the help of the Zacks Stock Screener, we have picked a few apparel stocks that appear well-positioned to surpass the Zacks Consensus Estimate this earnings season.

Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chance of an earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

3 Stocks Primed for Earnings Beat

FIGS, Inc. (FIGS Quick QuoteFIGS - Free Report) enters the earnings season with strong customer momentum, international growth and improving execution. Strength in scrub wear, layering systems and emerging categories such as outerwear, compression socks and loungewear is supporting growth. FIGS is also benefiting from effective marketing and rising brand engagement. Disciplined inventory management, fulfillment efficiencies and reduced promotions are aiding profitability despite tariff pressure.

FIGS, Inc. Price, Consensus and EPS Surprise

With product innovation, community hubs and deeper healthcare-professional engagement, FIGS appears well-positioned heading into earnings. The company currently has an Earnings ESP of +100.00% and a Zacks Rank #1. The Zacks Consensus Estimate for first-quarter fiscal 2026 earnings per share (EPS) has remained unchanged at 1 cent in the past 30 days. FIGS has a trailing four-quarter earnings surprise of 187.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Gap, Inc. (GAP Quick QuoteGAP - Free Report) appears well-positioned heading into earnings, backed by sustained brand momentum, disciplined execution and healthier merchandise productivity. The company delivered its eighth straight quarter of positive comparable sales in the fourth quarter of fiscal 2025, led by strength across Gap, Old Navy and Banana Republic. Management highlighted traction from product innovation, culturally relevant marketing and reduced discounting, which supported higher average unit retails and solid margin trends. 

Gap brand continues to benefit from Gen Z engagement, denim gains and improved store formats, while Old Navy remains strong in activewear, denim and kids. Cost discipline, sourcing actions and inventory control further support profitability, making GAP favorably placed this earnings season. Gap currently has an Earnings ESP of +25.11% and a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2026 EPS has risen by 2 cents to 39 cents in the past 30 days. GAP has a trailing four-quarter earnings surprise of 6.6%, on average.

Capri Holdings Limited (CPRI Quick QuoteCPRI - Free Report) looks well-placed as turnaround efforts at Michael Kors and Jimmy Choo gain traction. On its third-quarter fiscal 2026 earnings call, management cited sequential improvement in retail trends, stronger full-price sell-throughs and lower promotional activity, which supported underlying gross margin expansion despite tariff pressure. Michael Kors is benefiting from refreshed assortments, improved pricing architecture and better response to newer styles, while Jimmy Choo is seeing momentum in accessories and casual footwear. 

Elevated marketing, influencer engagement and store renovations are also strengthening brand desirability. With better execution, a healthier sales mix and disciplined cost control, CPRI appears positioned for a solid earnings show. Capri Holdings currently has an Earnings ESP of +20.37% and a Zacks Rank #3. The Zacks Consensus Estimate for fourth-quarter fiscal 2026 EPS has remained unchanged at 11 cents in the past 30 days. CPRI delivered an earnings surprise of 3.85% in the last reported quarter.