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5 Textile - Apparel Stocks to Watch Amid Industry Challenges
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Persistent inflationary pressures and supply chain disruptions are major hindrances for many participants in the Zacks Textile - Apparel industry. Players in the space are also feeling the impact of decreased consumer demand.
Despite these challenges, Lululemon Athletica Inc. (LULU - Free Report) , PVH Corp. (PVH - Free Report) , Crocs, Inc. (CROX - Free Report) , Guess?, Inc. (GES - Free Report) and G-III Apparel Group, Ltd. (GIII - Free Report) are well-positioned for growth thanks to their focus on improving physical and digital operations, alongside robust efforts in brand development.
About the Industry
The Zacks Textile - Apparel industry includes companies and lifestyle brands that manufacture, design, distribute, source, market and sell apparel, footwear and accessories for men and women. These include fashion apparel like dresses, pants, skirts, shorts, shirts, jackets, blouses and knitwear and intimate apparel like underwear and shapewear. The industry also comprises companies offering apparel for a healthy lifestyle and athletic activities, such as yoga, running and training. Some companies also deal with fitness-related accessories like gloves, bags, headwear and sports masks. The industry participants operate through direct-to-consumer (brick-and-mortar and online), wholesale and licensing distribution channels. Most players operate through stores and digital networks in the United States and internationally.
4 Trends Shaping the Future of the Textile - Apparel Industry
Cost Concerns: Textile-apparel companies are facing challenges related to elevated input costs, which continue to impact their profitability. Players in the space are susceptible to disruptions in shipping, leading to delays and increased freight expenses. Higher selling, general and administrative (SG&A) costs stemming from increased investments in marketing and enhancements to physical and digital retail channels are concerning. Decreased consumer demand due to inflation and reduced discretionary spending further compound these pressures. Moreover, the competitive labor market adds another layer of concern, collectively posing threats to profit margins of these companies.
Tough Consumer Landscape: Textile-apparel companies are navigating a turbulent retail landscape worldwide, stemming from inflationary pressures and high interest rates. This environment prompted a noticeable change in consumer habits, marked by lower spending on non-essential items and a strong focus on seeking value. As costs of clothing and textiles continue to climb, consumers are becoming more selective in their purchasing decisions, prioritizing essential goods. This shift is placing significant strain on the demand dynamics for these companies.
Improved Store Traffic, Solid Digital Trends: As consumers seamlessly transition between physical and digital platforms, Textile-apparel companies are enhancing guest experiences across all touchpoints. These participants prioritize investments to elevate in-store interactions, and boost brick-and-mortar sales. Concurrently, the convenience of online shopping is driving significant growth in e-commerce for textile-apparel players. They have consistently focused on upgrading their e-commerce platforms, enhancing mobile applications, modernizing payment systems, integrating online and offline operations and expanding their capabilities for order fulfillment. Services like buy online, pickup in-store and curbside delivery are gaining popularity among industry participants.
Brand-Enhancing Endeavors: Textile-apparel companies have been benefiting from efforts to bolster their brands through diverse marketing strategies, licensing agreements, acquisitions and partnerships. Introducing new products remains integral to these companies’ growth strategies. Constant innovation in product offerings is a key aspect of remaining competitive and catering to changing consumer demands.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Textile – Apparel industry is housed within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #161, which places it in the bottom 36% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries results from a negative aggregate earnings outlook for the constituent companies. Since the beginning of May 2024, the industry’s consensus earnings estimate for the current financial year has dropped 19.9%.
Let’s look at the industry’s performance and current valuation.
Industry vs. Broader Market
The Zacks Textile - Apparel industry has underperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite in the past year.
The industry has declined 11.8% during this period against the broader sector’s growth of 1%. Meanwhile, the S&P 500 has rallied 22.3% in the same period.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing consumer discretionary stocks, the industry is currently trading at 12.07X compared with the S&P 500’s 21.71X and the sector’s 16.71X.
Over the last five years, the industry traded as high as 29.68X, as low as 9.77X and at the median of 14.53X, as the chart below shows.
Price-to-Earnings Ratio (Past 5 Years)
5 Textile - Apparel Stocks to Keep a Close Eye on
G-III Apparel: The Zacks Rank #1 (Strong Buy) company designs, sources and markets women's and men's apparel. G-III Apparel is driving growth through strategic initiatives focused on digital expansion, omnichannel capabilities and brand diversification. The company's acquisition and strategic investment in AWWG is enhancing its European presence and distribution capabilities. With a commitment to reducing reliance on PVH brands and expanding its market reach through innovative product launches and strategic partnerships, G-III Apparel is well-positioned for continued profitability and growth in the fiscal 2025 and beyond. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII’s current fiscal-year earnings per share (EPS) has remained unchanged in the past 30 days at $3.63. Shares of G-III Apparel have gained 28.2% in the past year.
Price and Consensus: GIII
Guess?: The company designs, markets, distributes and licenses lifestyle collections of apparel and accessories, sports a Zacks Rank #1. It continues to advance its customer-focused strategies, such as omnichannel capabilities, advanced data analytics and customer segmentation. GES is benefiting from strong global brand momentum, with positive customer reception to its collections across various product categories. Management is optimistic about its robust global platform, which will drive growth of Guess and Marciano businesses alongside rag & bone, the company's first acquisition. With a solid international presence, diverse product portfolio and strategic growth initiatives, Guess? aims to maintain its positive momentum and leverage growth opportunities in key markets.
The Zacks Consensus Estimate for Guess?’s current fiscal-year EPS has remained unchanged in the past 30 days at $2.88. GES’s stock has increased 10% in the past year.
Price and Consensus: GES
lululemon: The yoga-inspired athletic apparel company currently carries a Zacks Rank #2 (Buy). Lululemon is leveraging its ‘Power of Three X2’ growth strategy to propel significant expansion, aiming for $12.5 billion in net revenues by 2026, doubling its 2021 figure. Key drivers include robust product innovation, enhancing guest experiences, and expanding into new markets. Store investments and omni-channel capabilities are pivotal, with plans to open new stores and optimize existing ones globally. Digital growth is emphasized through enhanced e-commerce functionalities and a strong membership program. Lululemon anticipates sustained momentum and market share gains, supported by optimized cost structures and operational enhancements.
The Zacks Consensus Estimate for lululemon’s current fiscal year EPS has remained unchanged in the past 30 days at $14.29. The LULU stock has dropped 28.2% in the past year.
Price and Consensus: LULU
PVH Corp: This designer, marketer and retailer of men's, women's and children's apparel and accessories has a Zacks Rank #2. PVH Corp is leveraging its diversified brand portfolio, including Calvin Klein and Tommy Hilfiger, to drive above-average industry growth through effective brand management and strategic initiatives. Key efforts under the PVH+ Plan focus on enhancing product offerings, engaging consumers digitally and optimizing operational efficiencies. The company's direct-to-consumer and digital commerce channels are seeing significant growth. The extension of key licensing agreements and strategic reinvestment underscores its commitment to sustained growth and operational excellence, positioning PVH for long-term success in a competitive global market.
The Zacks Consensus Estimate for PVH’s current fiscal-year EPS has moved up by a couple of cents in the last 30 days to $11.24. PVH Corp’s shares have gained 12.4% in the past year.
Price and Consensus: PVH
Crocs: The designer, developer, manufacturer, marketer and distributor of casual lifestyle footwear and accessories currently carries a Zacks Rank #2. Crocs is advancing its growth strategy through three core initiatives aimed at sustainable expansion. These include enhancing brand relevance through iconic products and collaborations, strategic investments in Tier 1 markets to bolster market share via talent and digital enhancements, and diversifying product offerings to attract a broader consumer base. Crocs anticipates substantial profitability improvements, supported by ongoing product innovation and effective market execution. Also, CROX is making significant progress in expanding digital and omnichannel capabilities.
The Zacks Consensus Estimate for Crocs’ current fiscal-year EPS has remained unchanged in the past 30 days at $12.70. The stock has gained 8% in the past year.
Price and Consensus: CROX
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5 Textile - Apparel Stocks to Watch Amid Industry Challenges
Persistent inflationary pressures and supply chain disruptions are major hindrances for many participants in the Zacks Textile - Apparel industry. Players in the space are also feeling the impact of decreased consumer demand.
Despite these challenges, Lululemon Athletica Inc. (LULU - Free Report) , PVH Corp. (PVH - Free Report) , Crocs, Inc. (CROX - Free Report) , Guess?, Inc. (GES - Free Report) and G-III Apparel Group, Ltd. (GIII - Free Report) are well-positioned for growth thanks to their focus on improving physical and digital operations, alongside robust efforts in brand development.
About the Industry
The Zacks Textile - Apparel industry includes companies and lifestyle brands that manufacture, design, distribute, source, market and sell apparel, footwear and accessories for men and women. These include fashion apparel like dresses, pants, skirts, shorts, shirts, jackets, blouses and knitwear and intimate apparel like underwear and shapewear. The industry also comprises companies offering apparel for a healthy lifestyle and athletic activities, such as yoga, running and training. Some companies also deal with fitness-related accessories like gloves, bags, headwear and sports masks. The industry participants operate through direct-to-consumer (brick-and-mortar and online), wholesale and licensing distribution channels. Most players operate through stores and digital networks in the United States and internationally.
4 Trends Shaping the Future of the Textile - Apparel Industry
Cost Concerns: Textile-apparel companies are facing challenges related to elevated input costs, which continue to impact their profitability. Players in the space are susceptible to disruptions in shipping, leading to delays and increased freight expenses. Higher selling, general and administrative (SG&A) costs stemming from increased investments in marketing and enhancements to physical and digital retail channels are concerning. Decreased consumer demand due to inflation and reduced discretionary spending further compound these pressures. Moreover, the competitive labor market adds another layer of concern, collectively posing threats to profit margins of these companies.
Tough Consumer Landscape: Textile-apparel companies are navigating a turbulent retail landscape worldwide, stemming from inflationary pressures and high interest rates. This environment prompted a noticeable change in consumer habits, marked by lower spending on non-essential items and a strong focus on seeking value. As costs of clothing and textiles continue to climb, consumers are becoming more selective in their purchasing decisions, prioritizing essential goods. This shift is placing significant strain on the demand dynamics for these companies.
Improved Store Traffic, Solid Digital Trends: As consumers seamlessly transition between physical and digital platforms, Textile-apparel companies are enhancing guest experiences across all touchpoints. These participants prioritize investments to elevate in-store interactions, and boost brick-and-mortar sales. Concurrently, the convenience of online shopping is driving significant growth in e-commerce for textile-apparel players. They have consistently focused on upgrading their e-commerce platforms, enhancing mobile applications, modernizing payment systems, integrating online and offline operations and expanding their capabilities for order fulfillment. Services like buy online, pickup in-store and curbside delivery are gaining popularity among industry participants.
Brand-Enhancing Endeavors: Textile-apparel companies have been benefiting from efforts to bolster their brands through diverse marketing strategies, licensing agreements, acquisitions and partnerships. Introducing new products remains integral to these companies’ growth strategies. Constant innovation in product offerings is a key aspect of remaining competitive and catering to changing consumer demands.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Textile – Apparel industry is housed within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #161, which places it in the bottom 36% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries results from a negative aggregate earnings outlook for the constituent companies. Since the beginning of May 2024, the industry’s consensus earnings estimate for the current financial year has dropped 19.9%.
Let’s look at the industry’s performance and current valuation.
Industry vs. Broader Market
The Zacks Textile - Apparel industry has underperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite in the past year.
The industry has declined 11.8% during this period against the broader sector’s growth of 1%. Meanwhile, the S&P 500 has rallied 22.3% in the same period.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing consumer discretionary stocks, the industry is currently trading at 12.07X compared with the S&P 500’s 21.71X and the sector’s 16.71X.
Over the last five years, the industry traded as high as 29.68X, as low as 9.77X and at the median of 14.53X, as the chart below shows.
Price-to-Earnings Ratio (Past 5 Years)
5 Textile - Apparel Stocks to Keep a Close Eye on
G-III Apparel: The Zacks Rank #1 (Strong Buy) company designs, sources and markets women's and men's apparel. G-III Apparel is driving growth through strategic initiatives focused on digital expansion, omnichannel capabilities and brand diversification. The company's acquisition and strategic investment in AWWG is enhancing its European presence and distribution capabilities. With a commitment to reducing reliance on PVH brands and expanding its market reach through innovative product launches and strategic partnerships, G-III Apparel is well-positioned for continued profitability and growth in the fiscal 2025 and beyond. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GIII’s current fiscal-year earnings per share (EPS) has remained unchanged in the past 30 days at $3.63. Shares of G-III Apparel have gained 28.2% in the past year.
Price and Consensus: GIII
Guess?: The company designs, markets, distributes and licenses lifestyle collections of apparel and accessories, sports a Zacks Rank #1. It continues to advance its customer-focused strategies, such as omnichannel capabilities, advanced data analytics and customer segmentation. GES is benefiting from strong global brand momentum, with positive customer reception to its collections across various product categories. Management is optimistic about its robust global platform, which will drive growth of Guess and Marciano businesses alongside rag & bone, the company's first acquisition. With a solid international presence, diverse product portfolio and strategic growth initiatives, Guess? aims to maintain its positive momentum and leverage growth opportunities in key markets.
The Zacks Consensus Estimate for Guess?’s current fiscal-year EPS has remained unchanged in the past 30 days at $2.88. GES’s stock has increased 10% in the past year.
Price and Consensus: GES
lululemon: The yoga-inspired athletic apparel company currently carries a Zacks Rank #2 (Buy). Lululemon is leveraging its ‘Power of Three X2’ growth strategy to propel significant expansion, aiming for $12.5 billion in net revenues by 2026, doubling its 2021 figure. Key drivers include robust product innovation, enhancing guest experiences, and expanding into new markets. Store investments and omni-channel capabilities are pivotal, with plans to open new stores and optimize existing ones globally. Digital growth is emphasized through enhanced e-commerce functionalities and a strong membership program. Lululemon anticipates sustained momentum and market share gains, supported by optimized cost structures and operational enhancements.
The Zacks Consensus Estimate for lululemon’s current fiscal year EPS has remained unchanged in the past 30 days at $14.29. The LULU stock has dropped 28.2% in the past year.
Price and Consensus: LULU
PVH Corp: This designer, marketer and retailer of men's, women's and children's apparel and accessories has a Zacks Rank #2. PVH Corp is leveraging its diversified brand portfolio, including Calvin Klein and Tommy Hilfiger, to drive above-average industry growth through effective brand management and strategic initiatives. Key efforts under the PVH+ Plan focus on enhancing product offerings, engaging consumers digitally and optimizing operational efficiencies. The company's direct-to-consumer and digital commerce channels are seeing significant growth. The extension of key licensing agreements and strategic reinvestment underscores its commitment to sustained growth and operational excellence, positioning PVH for long-term success in a competitive global market.
The Zacks Consensus Estimate for PVH’s current fiscal-year EPS has moved up by a couple of cents in the last 30 days to $11.24. PVH Corp’s shares have gained 12.4% in the past year.
Price and Consensus: PVH
Crocs: The designer, developer, manufacturer, marketer and distributor of casual lifestyle footwear and accessories currently carries a Zacks Rank #2. Crocs is advancing its growth strategy through three core initiatives aimed at sustainable expansion. These include enhancing brand relevance through iconic products and collaborations, strategic investments in Tier 1 markets to bolster market share via talent and digital enhancements, and diversifying product offerings to attract a broader consumer base. Crocs anticipates substantial profitability improvements, supported by ongoing product innovation and effective market execution. Also, CROX is making significant progress in expanding digital and omnichannel capabilities.
The Zacks Consensus Estimate for Crocs’ current fiscal-year EPS has remained unchanged in the past 30 days at $12.70. The stock has gained 8% in the past year.
Price and Consensus: CROX