The specialty apparel industry has been making a strong comeback as people resume purchasing trendy outdoor wear with the easing of social distancing protocols. As a result, two prominent specialty apparel manufacturers—The Gap (GPS) and American Eagle Outfitters (NYSE:AEO)—have reported revenue and earnings growth for the last quarter. But which of these stocks is a better buy now? Read more to find out.The Gap, Inc. (GPS) and American Eagle Outfitters, Inc. (AEO) are two of the most popular retail apparel manufacturers based in the United States. With an international market presence, both companies are known for their distinctive products and garments, which they sell through retail stores and e-commerce platforms.
To remain profitable amid a pandemic, the global apparel industry has been adapting to shifting industry trends over the past year. E-commerce sales accounted for most of the revenues generated by companies last year, given the social distancing protocols. However, traditional brick-and-mortar apparel stores are witnessing a gradual rise in foot traffic lately as the mass vaccination drive and gradual easing of social distancing restrictions drive increasing demand for trendy outdoor apparel. Furthermore, with people engaging in more social activities this summer given the high pent-up demand for such pursuits, sales of trendy garments are increasing. Consequently, the global apparel market is expected to grow at a rate of 20.5% year-over-year to $635.17 billion in fiscal 2021.
AEO has gained 271.4% over the past year, while GPS returned 248.8%. In terms of year-to-date performance, AEO is the clear winner with 76.5% gains vs GPS’ 65.7% returns. AEO gained 91.5% over the past six months, compared to GPS’ 53.8% gains.