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Fashion apparel and accessories can be a lucrative investment sector if you research well before and pick the right companies. This sector can be fickle due to not only being affected by traditional underlying forces but also due to consumer taste and trends. A brand that is very popular one year can very well be put aside for another, very quickly, according to what is considered “in”.
Reputation and image is very important for the performance of retail stocks. There are a few metrics that you can use to gauge a brand including same store sales growth and gross margins.
Other risks to consider include the on-going trade war between the US and China that will include a further tariff on $60 billion of goods including categories that will affect Fashion stocks. The new tariffs will come into effect in June.
🛍 Consumer
Canada
RYU Apparel Inc. (RYU-X)
A largely Canadian fitness apparel company that also has a presence in the US. They are strengthening their ecommerce and online presence. They are a fairly new company, trading for under 5 years. Currently, they are in their growth stage.
stockchase.com Gildan Activewear Inc. (GIL-T)
A part Canadian and American manufacturer of unbranded clothing. They manufacture branded apparel on behalf of clients and businesses. The latest report has shown that they have great cash flow and are buying back stocks. A dividend increase has also been announced.
stockchase.com Le Chateau Inc. (A) (CTU-X)
A Montreal based specialty retailer. They are known for their contemporary designed clothing. A financing agreement of $1M was announced in February for working capital purposes.
stockchase.com Canada Goose Holdings (GOOS-T)
A Canadian luxury winter apparel maker. Their coats are priced in the thousands. It’s a little expensive now with 40x valuation but they have a history of breaking earnings forecasts. They are expanding globally and are enjoying growing sales.
stockchase.com Reitmans (Canada) Ltd. (A) (RET.A-T)
Brands under them include Reitmans, RW & CO and Penningtons. Tax loss selling affected them but they have been a steady name. They have been closing their worst stores. Some buy this just for the dividend, which is at 5.99%.
stockchase.com Aritzia Inc. (ATZ-T)
A Canadian women’s fashion brand out of Vancouver. They have been experiencing good growth and are expanding in the US where brand recognition is high too. Their online presence is strong and investors are keeping a close eye for its potential.
stockchase.com United States
Macys Inc. (formerly Federated Department Stores) (M-N)
Big box stores have been facing increased headwinds from ecommerce and changing consumer patterns. Macys has been the better of the bunch in cost reduction and doing online business but there is vulnerability to Amazon and other online competitors.
stockchase.com Ross Stores Inc. (ROST-Q)
The second largest off-price retailer after TJX. They buy excess inventories from more recognized brands and acts as an outlet. When traditional retail companies aren’t doing well, these companies will do better. It was one of the only stocks to have a positive rate of return in 2008.
stockchase.com Nordstrom Inc (JWN-N)
A chain of luxury department stores. They have a good presence in online retail and their ecommerce store is one of the best in the luxury space. Investors are expecting another strong earnings report since they have a history of beating expectations.
stockchase.com Chico’s FAS (CHS-N)
A women’s fashion retailer. Sycamore Partners has submitted an offer to purchase the entirety of the business for $3.50 per share. A previous offer for purchase at $4.30 was offered but rejected by the board since they saw the offer undervaluing the company.
stockchase.com Gap (GPS-N)
A major player in retail with brands such as Old Navy, Gap, Banana Republic under them. They are reporting first quarter earnings on May 30, 2019. They are suffering from the general trend away from brick and mortar stores. A longer-term survivor.
stockchase.com Tapestry Inc. (TPR-N)
Coach, Kate Spade and Stuart Weitzman are key labels under Tapestry Inc. They renovated much of their physical stores are starting to see a revival in the Coach brand. The share buyback program is going well as planned.
stockchase.com DSW Inc (DSW-N)
A footwear retailer. They performed some acquisitions and are opening stores globally. Same-store sales rose more than 5% in the latest report. They have a good history of raising dividends and it currently sits at 4.5%.
stockchase.com Michael Kors Holdings (KORS-N)
They changed their name to Capri Holdings Limited (CPRI-N) in January of this year. They have Versace and Jimmy Choo under them and are looking to bolster their operations through the various brands. Their original brand, Michael Kors, has had trouble growing sales and maintaining status and image.
stockchase.com American Eagle Outfitters (AEO-N)
An American clothing and accessories retailer that focuses on the teen to young adult segment. They are focusing on expanding online retail and investors are beginning to put more confidence behind this company. They have grown 6.2% year-to-date compared to the industry’s 4.3% decline.
stockchase.com Guess Inc (GES-N)
An apparel and accessories company that has been gaining interest from hedge funds and other investors. They are starting to repurchase their common stock and are redistributing capital. They recently cut their dividends in favour of the buyback plan.
Nike Inc (NKE-N)
A spectacular growth story with global presence. Revenues from China grew well and have not been affected as much by the US-China dispute. Consumer confidence must be closely monitored since this company is particularly vulnerable to be hit if it falls.
stockchase.com L Brands Inc. (LB-N)
Flagship brands under them include Victoria’s Secret and Bath & Body Work. The tariff war has hit these brands particularly hard. It is a high quality brand but is facing increasing pressure from other online retailers.
stockchase.com Abercrombie & Fitch (ANF-N)
A wildly volatile stock. They recently cut their COO position and some have questioned their accounting practices. A stock to watch but beware and do your due diligence.
stockchase.com Tiffany & Co. New (TIF-N)
A luxury jewelry and specialty retailer famous for their diamonds and sterling silver. They were also affected negatively due to the US-China trade war since investors worry that diamonds and jewelry will be included in tariffed goods.
stockchase.com Under Armour (UA-N)
A sports and casual wear manufacturer. They are nearing the end of a three year transformation. They are particularly popular due to the athleisure movement and demand for smart looking workout clothing.
stockchase.com LuLulemon Athletica (US) (LULU-Q)
A Canadian company trading on the NASDAQ. They have gotten support for their athleisure and fashion forward apparel. The major bulk of their clientele are discerning millennial shoppers looking for good quality apparel.
stockchase.com Urban Outfitters (URBN-Q)
An American multinational consumer goods and apparel company. They announced strong results in the holiday quarter and are expected to announce their Q1 earnings on May 21.
stockchase.com TJX Companies (TJX-N)
The largest international apparel and home fashion off-price retailer. They change inventory quickly and are good at keeping up with consumer taste. In a recession environment, these types of companies thrive. Their brands include Marshalls, Winners and Home Senses.
stockchase.com Hanesbrands (HBI-N)
A leading undergarments and athletic apparel manufacturer. They posted the highest quarterly sales growth in eight years for the fiscal year 2018. Champion, one of their brands, has been growing internationally and is expected to continue its expansion.
Carter’s Inc (CRI-N)
A children’s apparel company that supplies a lot of discount retailers under different names. Earnings were impacted by unfavourable currency rates and soft sales. However, a large majority of mothers shop at their stores and they are opening more stores than they are closing.
stockchase.com LVMH (Moet Hennessy Louis Vuitton) (LVMUY-OTC)
The biggest luxury-goods company in the world. It’s a good name to be defensive during the US-China tariff war as this is not expected to affect LVMH. High-end retail continues to do well and they are doing a great job with online commerce. A good stock to hold long term.
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