This upcoming holiday season is sure to open up another wave of spending as consumers continue their gift-giving and festivities. Indeed, this type of consumer spending helps boost sales in various sectors like textile & apparel companies. These textile stocks offer a wide variety of products, from luxury goods to everyday products utilized during the winter season, as well as presents for regular shoppers. And, this opens up various opportunities for investors to take advantage of.
With the economy slowly regaining momentum and the Fed signaling a rate reduction in 2024, we may be at the cusp of an even better 2024 economy. Hence, looking at sectors offering a strong potential to take advantage of the holiday rush and 2024 recovery is best. Here are three textile and apparel stocks to consider.
Ralph Lauren Corporation (RL)
Ralph Lauren Corporation (NYSE:RL) is a luxury products designer and manufacturer of clothing, apparel, fragrance, and various lifestyle products. The company operates mainly in Europe, Asia, and North America. It has collections for women, men, and children. Ralph Lauren is constantly working on growing its global footprint and has recently announced its plans to expand to Canada through digital commerce in the coming years. The company has also announced its first artist in its residence collaboration as part of its special products collection.
In its latest earnings report, Ralph Lauren exceeded expectations with its top-line revenue led by 6% growth in direct-to-consumer store sales and a 10% increase in average unit retail (AUR) – which shows the dominance of its brand and pricing power. Overall, the company continues to have a positive outlook on its revenue and operating margins.
In terms of expectations, RL kept its margins above projections – even with higher costs and marketing. The company also invests in increasing customer engagement via social media thanks to its increased diverse cultural engagements. This focus on consumer engagement and strategic investments puts RL first on our textile and apparel stocks list.
Lululemon Athletica Inc.(LULU)
Lululemon Athletica Inc. (NASDAQ:LULU) is a designer, retailer, and distributor of various athletic apparel and accessories. It operates under a direct-to-consumer and company-operated store. Its products include pants, tops, shorts, and jackets targeted to consumers who are into a healthy lifestyle, like running, training, yoga, and other activities. For example, the company recently announced its five-year strategic partnership with Peloton.
In terms of management, the company recently announced the addition of Shane Grant to its board of directors. Grant has an impressive track record in the global brand business, which will be a great addition to LULU’s “Power of Three ×2” growth strategy.
In terms of financials, the company reported a stellar increase in its revenue, growing 19% YoY. Gross profit was also 21% higher than last year’s quarter. While its operating income experienced a 4% dip, the adjusted figure still indicated an increase of 24%, highlighting the company’s resiliency despite the economic conditions.
As an investor, I like the fact that Lululemon has made various steps to foster shareholder value. Case in point: LULU’s $1 billion stock repurchase program proves they have enough cash left to please shareholders. This strong vision for growth and investment strategies gives LULU a solid and compelling argument for why it is one of the best textile and apparel companies to buy for your portfolio.
Skechers U.S.A.(SKX)
Skechers U.S.A., Inc. (NYSE:SKX) is a performance and lifestyle footwear and apparel company that operates in the wholesale and direct-to-consumer segments of the textile and apparel industry. The company partners with department stores, specialty stores, and sporting goods retailers under its wholesale segments. Its direct-to-consumer segment offers products through various marketplaces like factory outlets, digital sites, and mobile applications. The company has strategically increased its brand awareness by collaborating with artists like Ricardo Cavolo and Doja Cat.
Skechers reported an exceptional third quarter with record-breaking sales of $2.02 billion, representing a 7.8% YoY increase. Direct-to-consumer sales grew 23.8%, gross margin increased 52.9%, and the company experienced an overall 24.0% decrease in inventory.
Analysts also got some love this quarter. The company also beat earnings expectations by 19.23% thanks to the company’s growth strategies, like celebrity collaborations that raised brand awareness due to endorsements from Harry Kane, Julius Randle, and Snoop Dogg.
Looking forward, the company aims to reach $10 billion in sales by 2026. With its strong management, strategic partnerships, and impressive sales growth, it is a promising prospect if you’re looking for a textile company to buy.
On the date of publication, Rick Orford held long positions in LULU. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.