After suffering a downturn last year, the intimate apparel sector is in a rebuilding phase. The expansion of digital platforms, increase in consumer spending and pent-up demand for customized and comfortable products have been fueling the intimate apparel industry’s growth. Therefore, we think fundamentally strong stocks in this space, Gildan Activewear (NYSE:GIL) and Hanesbrands (NYSE:HBI), are worth betting on now. Conversely, Victoria's Secret (VSCO) and Naked Brand (NAKD) do not look well-positioned to capitalize on the industry tailwinds. We think these companies’ bleak financials make their stocks best avoided now. Let’s discuss.The intimate apparel market, or lingerie industry, offers a wide range of necessary and fashionable products. The sector experienced a downturn last year due to pandemic-related closure of physical stores and a decline in consumer spending on fashion items. However, efforts to strengthen digital platforms, customized product innovations, a wide range of designer products based on various outfits and body types, rising consumer spending, and pent-up demand for comfortable and hygienic intimate apparel have been driving the market’s growth since. The global lingerie market is expected to register a 7.8% CAGR by 2026.
This industry is projected to witness a significant boost in both e-commerce and brick-and-mortar store sales. Therefore, we think fundamentally sound intimate apparel stocks Gildan Activewear Inc . (GIL) and Hanesbrands Inc. (HBI) could be solid bets now.
However, amid remote lifestyles, consumers’ preferences are shifting from fashionable intimate wear toward more comfortable and necessary products. Therefore, we think fundamentally weak companies in this space, Victoria's Secret & Co. (VSCO) and Naked Brand Group Limited (NAKD), might struggle to stay afloat.