Marilyn Monroe once said, “give a girl the right shoes and she can conquer the world.” But I think it’s more accurate to say, “give a girl a credit card, and she can move markets.” Either way, it’s clear that the fashion industry has grown into a behemoth that impacts everything from third-world politics to brand marketing best practices. Now, your favorite style trends this season such as denim jumpsuits, chambray shirts or floral, flowy shorts can be more than something you find yourself searching for at your local Nordstrom. It also serves as a way for you to predict movement in the investment world. In that regard, here are 5 retail stocks ranging from stylish sportswear to lavish accessories to simplistic apparel that can be more than just a dent in your wallet!
Under Armour Inc. (UA): With physical fitness becoming a lifestyle goal that is sweeping the globe, sportswear makers at Under Armour have benefited tremendously as their stock has been climbing up charts once again. Second quarter revenue rose 34% to 0 million which led to a one day jump of 15% in it’s stock price. These results were due in large part to an increasing interest in running, training and golfing around the globe and the increase in sales is expected to continue past this quarter into the rest of 2014. The company has experienced 16 consecutive quarters of total revenue growth above 20% and 18 consecutive quarters of more than 20% of revenue growth in apparel sales. This growth is due in large part to their strategies in China. Overall, Under Armour Inc. is a company with continuously increasing value that would be a great addition to your closet and your portfolio!
Lululemon Athletica Inc. (LULU): Although Lululemon’s stocks have not performed particularly well during the first half of 2014, a turnaround is expected during the second half of the year. In the past, Lululemon has been a well regarded premium designer with a strong customer base. Unfortunately, it has suffered a few setbacks the past 18 months with a recall of their “see-through” yoga pants, founder Dennis Wilson arguing with the board while trying to assert his influence, and finally some changes at the CEO and Chief Product Officer positions.
However, it does have some decent numbers, with its P/E ratio and Gross and Operations margins better than Adidas, Nike and Gap and with the right strategies, the future could be bright for Lululemon.
Chic and Glamorous Style
Coach (COH): Despite Coach’s progressing decrease in popularity, the company is making a comeback with fresh marketing strategies to revive their original position as a leader in the leather accessories industry. Reestablishing itself as an international brand, the company is implementing the right steps to right itself in multiple markets. For example, it is opening special discount outlets in North America to make products more affordable and accessible, launching an advertising campaign in September 2014 in collaboration with one of the most renowned fashion photographers in the world Stephen Meisel, and shutting down 70 stores that have not been meeting standards in a measure to cut costs. That being said, there are a couple things that still raise red flags with this stock. For one, their creative director, Stuart Vevers, may not be the man for the job, with the Fall 2014 collection still questionable in terms of how it will resonate with Coach’s core consumers. However, even if this collection fails (which is not uncommon with designers who have changed houses), Vevers may still be able to learn from his mistakes in the future. Additionally, the company seems to be slightly too optimistic with its future China sales growth, with double digit growth predicted. However, as Michael Kors ($KORS) begins increasing its reach in China and affecting Coach’s dominance there, their growth could be negatively impacted. With the company’s current stock price hovering around $34.6 and the 52 week high coming in at $59.21 in July of 2013, this stock could present a potential opportunity, but only if you believe in the turnaround.
Tiffany & Co. (TIF): Are you a jewelry lover? Tiffany & Co’s solid product line of prestigious and intricately crafted jewelry pieces comprised of metals ranging from sterling silver to yellow gold to even glassware may satisfy your needs. As one of the most renowned jewelry and specialty retailers, the luxury retailer has continued to perform positively. With many strengths moving forward in its increased margins, strong sales, and various new areas of expansion, the company may present a good investment opportunity. That being said, the jewelry retailer’s largest weakness lies in the type of product it sells. Unfortunately, as soon as the economy goes south, consumption of luxury goods such as high priced jewelry decreases as consumers budget more and spend less on items that are deemed “non-essential”. However, since the economic recession, Tiffany & Co has performed fairly well and will most likely continue to do so as the economy gets stronger.
Simple and Casual Style
Gap, Inc. (GPS): Gap, Inc. operates Banana Republic, Old Navy, Piperlime, Athleta, and other brands as well. The company has recently set to launch in Austria and Slovenia, having expanded its international reach since their first international stores in 2006. Today, there are over 300 stores of Gap all over the world. Gap has a few upcoming opportunities such as the “back-to-school” season that will hopefully have their stock climbing the charts once again. Whether or not Gap succeeds during the back-to-school season will influence the strength of the brand for the rest of 2014. That being said, Gap is currently trading at around .61 and its stock price in 2014 has been strong. However, one thing to note is that 4 insiders have sold Gap stock within one month, with 2 of them decreasing their holdings by 10%. This can mean a lot of different things, but is definitely something to keep in mind when purchasing the stock. Perhaps Gap has reached its potential?
In all, when analyzing a stock, its clear that there are many different factors that can ultimately affect your decision. For example, with Coach, do you believe in their strategy? Do you think that the economy will be stable enough for people to continue consuming luxury goods? Overall, its important to investigate the company strategy, the team behind that strategy and the overall economic conditions the company needs to thrive.