The luxury goods market is booming due to economic recovery and increased consumer spending. Sectors such as high-end fashion, jewelry, and watches are experiencing steady growth, with demand driven by the Asia-Pacific region. This highlights the shift to a direct-to-consumer model and adaptation of trends.
So as global demand for luxury goods soars, high-performing companies like Tapestry Co. (TPR), Ralph Lauren Corporation (RL), and Nordstrom Inc. (JWN) are worth considering.
Younger consumers are pushing luxury brands to embrace sustainability and digitization to become more relevant in line with their evolving tastes. Transparency and responsible practices drive premium sales and outperformance across categories such as cosmetics, jewelry and apparel. As a result, the global luxury fashion market is expected to reach $410.6 billion by 2032, growing at a CAGR of 5.8%.
Despite certain challenges, the consumer outlook remains positive for the second half of 2025, with increased tourism and expanded retail channels supporting the sector’s recovery. Online retail has emerged as the leading platform for luxury purchases, with brands focusing on personalized digital experiences. The luxury goods market is expected to grow by $473.9 billion this year, at a CAGR of 4%.
Considering these favorable trends, let’s analyze the fundamental aspects of the three fashion & luxury industries, starting with the third option.
Stock #3: Tapestry Co., Ltd. (TPR)
TPR is an international provider of luxury accessories and branded lifestyle products. The company operates in three segments: Coach, Kate Spade, and Stuart Weitzman.
In terms of gross profit margin over the past 12 months, TPR’s 73.91% is 95.6% higher than the industry average of 37.79%. The company’s trailing twelve month return on common stock was 29.92%, which was 172.7% higher than the industry average of 10.97%. Moreover, the company’s trailing twelve month net profit margin was 12.12%, which is 188.2% higher than the industry average of 4.20%.
TPR’s net sales for the first quarter ended September 28, 2024 were $1.51 billion. Gross profit increased 3.4% year-on-year to $1.13 billion. The company reported net income of $186.6 million, or $0.79 per share. Furthermore, total assets are $13.73 billion as of September 28, 2024, compared to $13.4 billion as of June 29, 2024.
Street expects TPR’s EPS to increase 5.9% year-over-year to $1.73 for the quarter ending December 31, 2024. Revenue for the quarter is expected to be $2.11 billion, up 1.2% year over year. TPR stock has increased 76.1% over the past year, closing at $65.87.
TPR’s solid outlook is reflected in its POWR rating. POWR Ratings evaluates stocks by 118 different factors, each with its own weighting.
We have achieved an A grade in terms of quality. Ranked #26 out of 59 stocks in the Fashion & Luxury industry. Click here to access all POWR Ratings (Growth, Value, Momentum, Stability, Sentiment) for TPR.
Stock #2: Ralph Lauren Corporation (RL)
RL designs, markets and sells lifestyle products in North America, Europe, Asia and other international markets. The company offers apparel such as men’s, women’s and children’s clothing, as well as footwear, accessories, leather goods, home goods, fragrances and more.
In terms of trailing 12-month leveraged FCF margin, RL’s 11.78% is 161.8% higher than the industry average of 4.50%. The company’s trailing 12-month EBIT margin is 12.42%, which is 54.5% higher than the industry average of 8.04%. Additionally, the company’s trailing 12-month return on assets was 10.06%, which is 155.4% higher than the industry average of 3.94%.
RL’s revenue for the fiscal second quarter ended September 28, 2024 increased 5.7% year-over-year to $1.73 billion. Gross profit increased 8% year over year to $1.16 billion. Additionally, the company’s non-GAAP net income and non-GAAP net income per common share increased 15% and 21%, respectively, from the prior year period to $162.1 million and $2.54.
RL’s EPS and revenue for the quarter ending December 31, 2024 are expected to be $4.5 billion and $2.01 billion, up 8% and 4%, respectively, from the year-ago period. It beat consensus EPS estimates in each of the trailing four quarters. Shares have increased 57.6% over the past year, closing at $229.55.
It’s no surprise that RL’s overall rating is B. This translates to a “Purchase” in the proprietary POWR rating system.
The quality grade is A and the sentiment grade is B. It ranks 12th in the industry. In addition to the above, we also give RL grades for Growth, Value, Momentum, and Stability. Get all RL ratings here.
Stock #1: Nordstrom Inc. (JWN)
JWN is a fashion retailer offering apparel, footwear, beauty products, accessories and homeware for women, men, youth and children. We offer a variety of branded and private label merchandise through a variety of channels, including Nordstrom Brands stores, online and clearance stores.
On December 18, 2024, JWN announced plans to open a new Nordstrom Rack in Nashua, New Hampshire in spring 2025. The 30,000 square foot store will offer discounted brands and services such as online order pickup and easy returns.
In terms of return on common stock over the past 12 months, JWN’s 30.54% is 178.3% higher than the industry average of 10.97%. Return on total equity for the trailing twelve months was 6.71%, which was 8.6% higher than the industry average of 6.18%. Similarly, the company’s trailing 12-month asset turnover ratio is 1.65x, which is 68.2% higher than the industry average of 0.98x.
JWN’s revenue for the third quarter ended November 2, 2024 increased 4.6% year-over-year to $3.35 billion. The company’s adjusted EBITDA was $231 million, an increase of 12.7% year over year. Additionally, adjusted EPS increased 32% year over year to $0.33.
Analysts expect JWN’s sales for the quarter ending April 30, 2025 to be $3.41 billion, up 2.2% year-over-year. EPS for fiscal 2026 is expected to be $2.04, up 4.2% from the previous year. It beat Street EPS estimates in three of the subsequent four quarters. Over the past year, JWN stock has increased 28%, closing at $24.21.
JWN’s strong fundamentals are reflected in its POWR Rating. The overall rating is B, which is equivalent to a “buy” according to our own rating system.
A grade for value, B grade for momentum and quality. Ranked 5th in the Fashion & Luxury industry. Click here to see JWN’s growth, stability, and sentiment ratings.
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TPR stock was trading $0.16 lower (-0.24%) at $65.71 per share on Monday morning. Year-to-date, TPR has risen 83.87%, compared to a 25.21% rise in the benchmark S&P 500 index over the same period.
About the author: Abhishek Bhuyan
Abhishek began his professional journey as a financial journalist because of his keen interest in determining the fundamental factors that influence the future performance of financial products. more…
