The trends in the retail industry are evolving very fast, primarily being shaped by the influence of the Millennials and Gen Z generations. Companies and brands are endeavoring to cater to the shifting consumer preferences and adopt the latest technologies for the same.
Given this background, investors could invest in fundamentally sound apparel stocks, The TJX Companies, Inc. (TJX), Ralph Lauren Corporation (RL), and Abercrombie & Fitch Co. (ANF) for potential gains.
Fashion is changing at lightning speed with evolving consumer behaviors, especially amid the influence of social media among millennials and Gen Z, coupled with online shopping trends. Further, factors like expanding e-commerce, economic growth, increasing consumer spending, and the holiday season are currently contributing to the apparel market demand.
Companies are emphasizing leveraging digital platforms and social media to engage the customer by understanding their preferences and offering personalized recommendations. Also, innovative technologies like augmented reality (AR) and virtual fitting rooms are leading to enhanced market efficiency.
With this, the global apparel market is projected to grow from $1.80 trillion in 2025 to $2.97 trillion by 2033, exhibiting growth at a CAGR of 8.02%. Factors including the rise of e-commerce and digital shopping, a growing number of affluent individuals, and growing consumer demand for sustainable and ethical fashion are driving the market growth.
Given these favorable market trends, let’s look at the fundamentals of the top B-rated Fashion & Luxury stocks, starting with the third choice.
Stock #3: The TJX Companies, Inc. (TJX)
TJX operates internationally as an off-price apparel and home fashion retailer. The company operates through four segments: Marmaxx; HomeGoods; TJX Canada; and TJX International.
On June 7, TJX entered into a definitive agreement for a joint venture with Grupo Axo, S.A.P.I. de C.V., an operator of global brands in Mexico and South America. Under the agreement, TJX owns 49% of the joint venture, and Axo owns 51% of the joint venture. The agreement comprises Axo’s off-price physical store business in Mexico, which includes over 200 stores.
The strategic collaboration with Axo expands TJX’s operations in Mexico and offers opportunities to grow and enhance the country’s leading off-price retailer.
During the third quarter that ended November 2, 2024, TJX’s net sales rose 6% year-over-year to $14.06 billion, and its total segment profit grew 10.2% year-over-year to $1.84 billion. The company’s income before income taxes rose 9.3% from the year-ago value to $1.74 billion.
Furthermore, the company’s net income and EPS came in at $1.30 billion and $1.14, up 8.9% and 10.7% year-over-year, respectively.
Street expects TJX’s revenue and EPS for the first quarter (ending April 2025) to increase 5.7% and 6.8% year-over-year to $13.19 billion and $0.99, respectively. Moreover, the company topped the consensus EPS and revenue estimates in all four trailing quarters, which is impressive.
TJX’s stock has increased 17.3% over the past six months and 42.4% over the past year to close the last trading session at $125.90.
TJX’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Stability, Sentiment, Momentum, and Quality. Within the B-rated Fashion & Luxury industry, TJX is ranked #20 out of 60 stocks.
Click here to access additional TJX ratings.
Stock #2: Ralph Lauren Corporation (RL)
RL designs, markets, and distributes lifestyle products internationally. The company provides apparel for men's, women's, and children's clothing. It also offers products like footwear, accessories, sneakers, sandals, eyewear, fashion and fine jewelry, scarves, hats, gloves, umbrellas, etc.
On September 13, RL's Board of Directors declared a regular quarterly dividend of $0.825 per share on its common stock. The dividend was paid on October 11, 2024, to shareholders of record at the close of business on September 27, 2024.
RL pays an annual dividend of $3.30, which translates to a yield of 1.45% at the current share price. Its four-year average dividend yield is 1.86%. Moreover, the company’s dividend payouts have increased at a CAGR of 31.8% over the past three years.
For the second quarter that ended September 28, 2024, RL reported revenues of $1.73 billion, up 5.7% year-over-year, and its gross profit grew 8% from the prior-year quarter to $1.16 billion. The company’s adjusted net income totaled $162.10 million or $2.54 per common share, reflecting 15% and 20.9% growth from the previous year’s quarter, respectively.
Street expects RL’s EPS for the third quarter (ending December 2024) to increase 7.8% year-over-year to $4.50. For the same quarter, the company’s revenue is expected to grow 3.9% year-over-year to $2.01 billion. Also, the company surpassed the consensus revenue and EPS estimates in all four trailing quarters.
RL’s shares have gained 21.1% over the past six months and 69.9% over the past year to close the last trading session at $228.13.
RL’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
RL has an A grade for Quality. It is ranked #19 out of 60 stocks in the same industry.
In addition to the POWR Ratings we’ve stated above, we also have other ratings of RL for Growth, Value, Sentiment, Momentum, and Stability. Get all RL ratings here.
Stock #1: Abercrombie & Fitch Co. (ANF)
ANF is an international omnichannel retailer. It offers an assortment of apparel, personal care products, and accessories for men, women, and kids under brands like Abercrombie & Fitch, abercrombie kids, Hollister, and Gilly Hicks.
On December 4, ANF announced a multi-year franchise partnership with Myntra Jabong to expand its presence in the Indian market. The collaboration focuses on establishing retail stores, e-commerce platforms, and digital storefronts. The agreement supports long-term opportunities for global, omnichannel growth for ANK’s brands.
Also, on August 15, ANF entered into a new partnership with Haddad Brands to expand its global reach of its abercrombie kids brand. The strategic collaboration is positioned to support the long-term growth of ANF and its brands.
During the third quarter, which ended November 02, 2024, ANF’s net sales increased 14.4% year-over-year to $1.21 billion. Its adjusted operating income rose 25.4% from the year-ago value to $179.28 million. Net income attributable to A&F of $131.98 million indicates growth of 37.2% from the prior year’s quarter. Also, its adjusted EPS was $2.50, up 31.6% year-over-year.
Street expects ANF’s revenue and EPS for the fourth quarter (ending January 2025) to increase 7.1% and 18.4% year-over-year to $1.56 billion and $3.52, respectively. Also, the company has topped the consensus revenue and EPS estimates in all of the trailing four quarters.
Shares of ANF have surged 58.8% year-to-date and 71.6% over the past year to close the last trading session at $140.07.
ANF’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
ANF has an A grade for Quality. It is ranked #18 out of 60 stocks in the B-rated Fashion & Luxury industry.
In addition to the POWR Ratings we’ve stated above, we also have ANF ratings for Momentum, Value, Sentiment, Growth, and Stability. Get all ANF ratings here.
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TJX shares were trading at $126.84 per share on Tuesday afternoon, up $0.94 (+0.75%). Year-to-date, TJX has gained 37.08%, versus a 28.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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