Despite rising inflation and supply chain disruptions, an improving job market, the lifting of travel bans, and increasing consumer spending should help the apparel industry generate solid sales this holiday season. Therefore, we think fundamentally strong apparel retailers Levi Strauss & Co. (NYSE:LEVI), Under Armour (NYSE:UA) (UAA), Capri Holdings (CPRI), and Ralph Lauren (RL) could be solid bets now. Let’s discuss.Most apparel companies established or strengthened their digital presence amid the COVID-19 pandemic to offset the decline in sales caused by lower foot traffic at their brick-and-mortar stores and outright store closures. With solid progress on the vaccination front and rising consumer spending, the industry has witnessed decent sales growth of late, despite rising inflation and supply chain disruptions. Introducing new fashion apparel to keep pace with the changing consumer trends should enable apparel companies to grow this holiday season.
The lifting of travel bans affecting various nations should further drive apparel companies’ sales ahead of the holiday season. The National Retail Federation (NRF) forecasts holiday retail sales to rise between 8.5% -10.5% during November and December. Moreover, the global apparel market is expected to grow at 7.5% CAGR to $797.30 billion by 2025.
Given this backdrop, we think fundamentally sound apparel retailers Levi Strauss & Co. (LEVI), Under Armour, Inc. (UAA), Capri Holdings Limited (CPRI), and Ralph Lauren Corporation (NYSE:RL) could be solid bets now.