The revenue of the global luxury apparel sector is expected to jump from $63 billion in 2023 “to $93.1 billion by 2030,” according to Fortune Business Insights. That increase would represent a fairly impressive compound annual growth rate of 5.74%. Moreover, wealthy people will always spend significant money on their apparel, whether the economy is expanding or contracting, so trendy luxury apparel stocks can outperform the market in good times and bad times. Additionally, American companies within the sector can benefit from rapidly increasing confidence about the economy among Americans earning $100,000 annually or more. As wealthy Americans’ views about the economy improve, their spending on luxury apparel will accelerate. And the recent bull-market rally of stocks will only boost this trend. Here are three top luxury apparel stocks for investors who want to benefit from these developments.
Apparel Stocks: Birkenstock (BIRK)
Upper-end German footwear maker Birkenstock (NYSE:BIRK) delivered impressive 2023 financial results as its top line soared 20%, excluding currency fluctuations, to 1.49 billion euros while its EBITDA, excluding certain items, advanced 11% to 483 million euros. Finally, its cash flows from operating activities jumped a very impressive 53% to 359 million euros.
Also importantly, the firm has much room to grow in Asian countries, where it does not currently have much of a presence. In fact, BIRK only generates about 10% of its top line from the huge region, and the firm is looking to start generating much more revenue from its largest countries this year, Seeking Alpha columnist Gary Alexander reported last month.
Analysts, on average, expect the company’s earnings per share to come in at $1.34 this year and $1.74 in 2025, up from $1.22 in 2023.
Lululemon (LULU)
On Jan. 6, yoga apparel maker Lululemon (NASDAQ:LULU) issued a positive Q4 pre announcement, raising its sales guidance from $3.170 billion to $3.190 billion from $3.135 billion to $3.17 billion. The firm now expects that its top line rose an impressive 14-15% last quarter versus the same period a year earlier. LULU also increased its Q4 earnings per share estimate to $4.96-$5 from $4.85-$4.93.
Investor’s Business Daily gives LULU stock a 98 Composite Rating out of a possible 99. At the same time, Goldman Sachs and JPMorgan increased their price targets on the shares to $513 and $500, respectively, following the firm’s Q3 earnings report.
Analysts, on average, expect the apparel maker’s earnings per share to climb to $12.47 in 2024 from $10.07 in 2023.
Given that strong growth, LULU’s forward price-earnings ratio of 31.45 times is quite attractive.
Ralph Lauren (RL)
Ralph Lauren (NYSE:RL) reported impressive fiscal Q3 results on Feb. 8, as its earnings per share soared 31% versus the same period a year earlier while its sales climbed 6% year-over-year.
Also encouragingly, the firm noted that its customers’ inventories had dropped 15% YOY in the wake of the holiday season, boding well for its future quarterly results.
Also making me bullish on RL is that the company is growing rapidly in the huge Chinese market, where its sales spiked 30% YOY last quarter.
Another positive catalyst for RL is that Taylor Swift, arguably the world’s biggest entertainment star, is apparently a fan of the firm’s clothing. Specifically, she wore the company’s clothes in her picture on the cover of Time Magazine, and she was also sporting its apparel at a Kansas City Chiefs game.
Analysts, on average, expect RL’s earnings per share to climb to $10.26 this year, up from $8.34 in the previous year.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
