The clothing industry has been one of the hardest hit by the COVID-19 pandemic. With the threat of COVID-19 lingering, now was not the time to shop for new outfits. Plus, since almost everyone was forced into self-quarantine, there was literally nowhere to go anyway. Almost two years later, things are finally starting to change. This makes many investors wonder if now is the time to reinvest in clothing stocks.
There have been two major trends in clothing over the past few years. The first is the rise of electronic commerce. Companies that have created a digital or omnichannel experience tend to outperform others. The second trend is athleisure. Today’s consumer prefers comfort over almost everything. This is especially true now that remote working is slowly becoming the norm.
With that said, let’s take a look at the top five clothing stocks to buy.
NOTE: I am not a financial advisor and am simply providing information and commentary. Please do due diligence before making any decisions.
Best clothing stocks to buy
N Â° 5 Stitch Fix (Nasdaq: SFIX)
One of the first clothing stocks to buy is actually more of a “style” stock. Point correction is an online personal styling service. It uses data science, algorithms, and predictive analytics to personalize the clothes for you. It mainly creates custom looks based on your height, budget, and style history.
Currently CEO Elizabeth Spaulding says Stitch Fix is ââgoing through a “multi-quarter transformation.” He lowered short-term revenue expectations by looking at new ways to reach customers. Since the start of the year, the title has plunged 80% from its all-time high.
Despite this huge sale, Stitch Fix reported strong third quarter numbers. It reported third quarter revenue of $ 591 million. This represents a year over year (YOY) increase of 19%. On top of that, the total membership grew 11% year-on-year. This brought the total number of active customers to 4,180,000. Notably, Stitch Fix’s net revenue per user was $ 524 in the third quarter of 2021. That’s pretty amazing revenue to generate per user. Compare that to Disney +, which only generates $ 80 per user per year. If Stitch Fix can continue to add users consistently, it should have no problem generating income.
Stitch Fix stock has fallen 65% so far in 2021. It has risen 25% since its IPO in 2018.
Target # 4 (NYSE: TGT)
NOTE: I have a small position in Target
As the 8th largest retailer in the United States, Target sells more than clothes. However, this large retailer is quickly becoming one of the best clothing stocks to buy. In total, Target owns 48 different clothing brands. 10 of these brands generate over $ 1 billion in sales each year. It bears repeating. A billion dollars in sales is a milestone for most clothing inventories. Target alone has 10 brands that have reached this milestone.
Target is also one of the leaders in the omnichannel experience. Consumers shop online, pick up orders online at a store, or visit a store in person. This easy shopping experience makes Target one of the must-see places for shoppers.
In 2021, Target achieved total revenue of $ 93.56 billion. This is an increase of 19.78% from $ 78.11 billion in 2021. Target also reported total net income of $ 4.37 billion. This is an increase of 33.13% from $ 3.28 billion in 2020. Given that Target was deemed “essential” during the pandemic, it has not suffered a slowdown. This means that these year-over-year increases are pretty accurate, despite the pandemic.
The biggest holiday season in recent years?
Another thing to note is that Target is a massive destination for holiday shopping. In 2020, the pandemic completely smothered the holiday season. In 2021, people were allowed to meet. However, many people still refrained from assembling. Because of this, there’s a good chance there will be an increase in pent-up vacation spending this year. If that happens, Target will be one of the main winners. This is because people visit Target for freebies as well as food and drink.
Target knows this and is preparing accordingly. It racked up $ 2 billion in additional inventory and hired 130,000 additional workers. When it comes to its products, it has launched partnerships with Lego, Apple and Disney to get buyers excited.
Target’s stock has risen 34% so far compared to 2021. It has also increased 210% in the past five years.
N Â° 3 Crocs (Nasdaq: CROX)
Crocs have sneakily gone from being a near joke to being a staple for many people. Nowadays, tons of people wear Crocs around the house, when running errands or at the pool, without irony. It’s not just little kids who wear Crocs, either. Several big celebrities have supported Crocs. This endorsement list includes Justin Beiber, Post Malone, and Bad Bunny.
This rubber clog business has also not been disrupted by the pandemic. Being able to adapt to tough times is what makes them one of the best clothing stocks to buy. In 2020, Crocs reported annual revenue of $ 1.39 billion. This is an increase of 12.62% from $ 1.23 billion in 2019. It also reported net profit of $ 312.86 million. This is an increase of 161.81% from $ 119.5 million in 2019.
More recently, Crocs reported an incredibly strong third quarter 2021. Its turnover increased by 73% compared to the already strong 2020 figures. It also had an operating margin of 32%, the best in the industry. Despite supply chain issues, the CEO of Crocs expects a 20% increase in sales in 2022.
Crocs’ stock has grown over 150% so far in 2021. It has also grown over 2,100% in the past five years.
Best Clothing Stocks # 2 Lululemon (Nasdaq: LULU)
Lululemon is another of the best clothing stocks to buy. It is also one of the leading companies to pioneer the athleisure trend.
In fiscal 2021, Lululemon achieved annual revenue of $ 4.4 billion. This is an increase of 10.62% from $ 3.98 billion in fiscal 2020. It also reported total net income of $ 588.91 million. This is an 8.78% decrease from $ 645.60 million in 2020.
In general, Lululemon has one of the most powerful clothing brands in the market. On top of that, he recently acquired fitness tech company Mirror. Mirror has a product that allows people to get assisted workouts at home. This acquisition is in line with the CEO’s vision of a âhybridâ training model. He believes people will return to their gyms to train after COVID-19. However, he also believes that working from home will not die entirely. Buying Mirror will help Lululemon connect with their clients while they work out at home.
Lululemon’s stock has risen by around 14% so far in 2021. It has also increased by over 500% in the past five years.
TJX Companies No.1 Best Clothing Stock (NYSE: TJX)
TJX Companies is the holding company behind Home Goods, Marshall’s and TJ Maxx. These companies are all discount retailers that sell a wide variety of products. Of the three, TJ Maxx has an excellent selection of clothing. TJ Maxx, in particular, is what makes TJX Companies one of the leading clothing stocks to buy.
What sets this clothing stock apart is that it has largely ignored one of the major trends in e-commerce. TJ Maxx is pretty loud about being anti-eCommerce. As other companies scramble to provide 1-day delivery, TJ Maxx welcomes buyers with open arms. He believes that his unique advantage lies in the âtreasure huntâ. Shopping at TJ Maxx is unique because shoppers don’t really know what they are going to find. It’s entirely possible to find a Ralph Lauren jacket for $ 200 for just $ 80. The thrill of the treasure hunt is what brings customers here.
Additionally, all three stores are major destinations for vacation shoppers. TJX Companies could be one of the top performing clothing stocks during the holiday season.
Shares of TJX Companies have risen by around 11% so far in 2021. They have also risen by around 94% in the past five years.
For an overview on Nike, LVMH, and Tapestry Brands, check out my article on fashion stocks. If not, I hope you found this article helpful in discovering some of the best clothing stocks to buy. Please base all investment decisions on your own due diligence and tolerance for risk.
About Teddy Stavetski
A graduate of the University of Miami, Teddy studied marketing and finance while playing for four years on the soccer team. He has always had a passion for business and used his experience from a few personal projects to become one of the top rated business copywriters on Fiverr.com. When he’s not hammering out words on paper, you may find him hammering notes on the piano or walking to a random place.