The global apparel market is expected to exhibit stable growth in the coming years, mainly owing to the increasing disposable income of the middle-class and increased fashion awareness, thanks to social media, the influence of micro-influencers, and the popularity of fashion blogs. According to Statista, the size of the global apparel and footwear market is expected to reach $3.30 trillion by 2030.
Moreover, the inclination toward online shopping since the onset of the pandemic has boosted the fashion industry’s growth. In addition, fashion brands are increasing their online presence and making significant investments in big data and analytics to offer more personalized solutions. Another notable trend during the pandemic was a boom in athleisure as consumers swapped business casual and professional garb for yoga pants and T-shirts.
In a nutshell, the fashion industry is poised to evolve and grow in the coming years. Therefore, shares of popular fashion companies Capri Holdings Limited (CPRI), Levi Strauss & Co (LEVI), and Ralph Lauren Corporation (RL) could be solid additions to your portfolio.
Capri Holdings Limited (CPRI)
Headquartered in London, UK, CPRI operates as a designer, marketer, distributor, and retailer of branded women’s and men’s apparel; footwear; and accessories worldwide. Its Versace segment offers ready-to-wear, accessories, footwear, and home furnishings through a distribution network including boutiques, departments, and specialty stores.
On September 30, CPRI announced that its Versace segment had extended its license agreement with EuroItalia, an Italian fragrance, and cosmetics company, for another 15 years. This partnership is expected to develop and grow its fragrance business and expand its product portfolio.
CPRI’s total revenue increased 17.1% year-over-year to $1.30 billion in the fiscal second quarter ended September 25. Its gross profit grew 24.5% from the prior-year quarter to $884 million, while its net income, attributable to CPRI, improved 63.9% year-over-year to $200 million. Its EPS increased 60.5% from the same period the prior year to $1.30.
Street expects the company’s revenue to increase 12.8% year-over-year to $1.47 billion for the fiscal third quarter ended December 2021. The consensus EPS estimate for the same period of $1.69 indicates a rise of 2.2% year-over-year. In addition, CPRI beat Street EPS estimates in each of the trailing four quarters, which is impressive.
CPRI shares have gained 6.7% over the past six months and 6.1% over the past five days to close its last trading session at $60.07.
CPRI’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CPRI has an A grade for Quality and a B grade for Sentiment. In the 65-stock Fashion and Luxury industry, it is ranked #18. The industry is rated A.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the CPRI’s ratings for Growth, Value, Momentum, and Stability here.
Levi Strauss & Co (LEVI)
LEVI operates as an apparel company. The company designs and markets casual apparel, activewear, footwear, and related accessories for men, women, and children worldwide. The company also manufactures products under the Levi’s, Dockers, Signature by Levi Strauss & Co., and Denizen brands.
In September 2021, LEVI announced that it would redeem its $200 million aggregate outstanding principal amount of 5% Senior Notes due 2025 at a redemption price of 101.667% of the principal amount. The company expects to save $10 million annually in interest expense from this redemption.
LEVI’s net revenues increased 21.6% year-over-year to $1.68 billion in the fiscal fourth quarter ended November 28. Its adjusted gross profit grew 29.2% from the prior-year period to $978.20 million, while its adjusted net income improved 108.9% year-over-year to $169.80 million. Its adjusted EPS increased 105% from its year-ago value to $0.41.
The consensus revenue estimate of $1.54 billion in the fiscal first quarter ending February 2022 indicates an increase of 18.1% year-over-year. Likewise, the consensus EPS estimate of $0.41 indicates a rise of 20.7% year-over-year for the same period. LEVI has also topped the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 11.3% over the past year and 4.5% over the past five days to close yesterday’s trading session at $21.93.
It’s no surprise LEVI has an overall B rating, which translates to Buy in our proprietary rating system. The stock has a Sentiment and Quality grade of B. It is ranked #6 in the Consumer Goods industry. Click here to see the LEVI’s ratings for Growth, Value, Momentum, and Stability.
Ralph Lauren Corporation (RL)
RL operates as a designer, marketer, and distributor of lifestyle products worldwide. The company offers apparel, including a range of men’s, women’s, and children’s clothing and accessories. The company manufactures products under the Ralph Lauren Collection; Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, and Lauren Ralph Lauren brands.
On January 20, RL unveiled its collection with sustainably-minded temperature-responsive fabric that Team USA would use for the Winter Games Opening Ceremonies. Last month, the company also announced its new product, RLX CLARUS® Polo Shirt, exclusively at the 2022 Australian Open Tennis Tournament. The latest products should add to the company’s revenue stream by bolstering its portfolio of sustainable sportswear.
RL’s net revenues increased 26% year-over-year to $1.50 billion in the fiscal second quarter ended September 25. Its gross profit stood at $1.02 billion, up 27% from the prior-year quarter, while its net income increased 594.4% year-over-year to $193.30 billion. Also, its EPS increased 584.9% from its year-ago value to $2.57.
Analysts expect the company’s revenue to increase 14.8% year-over-year to $1.64 billion for the fiscal third quarter ended December 2021. The consensus EPS estimate for the same period of $2.19 indicates a rise of 30.9% year-over-year.
Over the past year, the stock has gained 9.7% and 1.4% intraday to close its last trading session at $110.84.
RL’s POWR Ratings reflect its solid fundamentals. The company has an overall rating of B, which translates to Buy in our POWR Rating system. RL has a Growth, Value, and Quality grade of B. In the Fashion and Luxury industry, it is ranked #21.
In addition to the POWR Rating grades I’ve stated above, one can get RL’s Momentum, Stability, and Sentiment ratings here.
CPRI shares fell $0.24 (-0.39%) in after-hours trading Tuesday. Year-to-date, CPRI has declined -5.27%, versus a -4.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
3 Fashionable Apparel Manufacturing Stocks to Add to Your Portfolio: Levi Strauss, Capri Holdings, and Ralph Lauren StockNews.com
