Despite slowing demand in mature markets and geopolitical tensions, high-income consumers continue to prioritize luxury spending amid economic uncertainty. Emerging markets, particularly Asia, are driving strong growth due to rising demand.
As global demand for luxury goods soars, it’s wise to focus on fundamentally strong stocks like Stephen Madden Limited (SHOO), Ralph Lauren Corporation (RL), and Hugo Boss AG (BOSSY). Maybe.
Digital engagement and exclusive collections are attracting both new and loyal customers as Gen Z and Millennials increase their interest in luxury goods. E-commerce and omnichannel strategies enhance accessibility and customer experience, driving luxury goods sales growth. This year, the luxury goods market is expected to generate $473.9 billion in revenue, with a projected CAGR of 4%.
Similarly, the global luxury fashion market will reach $410.6 billion by 2032, with a CAGR of 5.8% from 2024 to 2032, as high-demand categories such as cosmetics, jewelry, and apparel are experiencing strong growth. is predicted to grow. Retail channels are driving the sector’s recovery.
Considering these favorable trends, let’s analyze the fundamental aspects of three stocks in the Fashion & Luxury industry, starting with the third option.
Stock #3: Steven Madden, Ltd. (SHOO)
SHOO designs, sources and sells fashion-forward branded and private label footwear, accessories and apparel in the United States and internationally. The company operates through the following segments: Wholesale Footwear, Wholesale Accessories/Apparel, Direct-to-Consumer, and Licensing.
In terms of gross profit margin over the past 12 months, SHOO’s 41.27% is 9.5% higher than the industry average of 37.69%. Return on common stock for the trailing twelve months was 20.40%, which was 91.5% higher than the industry average of 10.66%. On the other hand, the company’s trailing 12-month CapEx/Sales of 1% is 65.5% lower than the industry average of 2.90%.
SHOO’s net sales for the third quarter ended September 30, 2024 were $621.17 million, an increase of 13% from the same period last year. Adjusted gross profit increased 11.6% year over year to $259.6 million. Additionally, the company’s adjusted net income attributable to SHOO decreased slightly year-over-year to $64.81 million, while adjusted net income per share increased 3.4% year-over-year to $0.91.
The Street expects SHOO’s revenue for the quarter ending December 31, 2024 to be $553.65 million, up 6.5% year-over-year, while EPS for the quarter will be $0.54, down 10.8% year-over-year. I’m predicting it. It beat Street EPS estimates in each of the subsequent four quarters. Shares have increased 12.8% over the past year, closing at $41.59.
SHOO’s mixed outlook is reflected in its POWR rating. The overall rating is C, which equates to neutral according to our own rating system. POWR Ratings evaluates stocks by 118 different factors, each with its own weighting.
Earns a C grade for Growth, Value, Momentum, Stability, Sentiment, and Quality. Ranked 20th out of 61 stocks in the Fashion & Luxury industry with a B rating. Click here to access all POWR ratings for SHOO.
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, including 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 149.3% higher than the industry average of 4.72%. The company’s trailing 12-month EBIT margin was 12.42%, which was 53.9% higher than the industry average of 8.07%. Additionally, the company’s trailing 12-month return on assets was 10.06%, which is 159.1% higher than the industry average of 3.88%.
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 7.9% and 3.9% year-over-year, respectively. It beat consensus EPS estimates in each of the trailing four quarters. Shares rose 64.9% over the past year, closing at $202.15.
It’s no surprise that RL’s overall rating is B. This translates to a “Purchase” in the proprietary POWR rating system.
B grade for quality and B grade for sentiment. It ranks 17th in the industry. In addition to the above, we also give RL grades for Growth, Momentum, Stability, and Sentiment. Get all RL ratings here.
Stock #1: Hugo Boss AG (BOSSY)
Headquartered in Metzingen, Germany, BOSSY and its subsidiaries provide apparel, footwear and accessories to men and women around the world. We also offer licensed products such as fragrances, eyewear, watches, children’s fashion, equestrian and cycling equipment.
On November 13, 2024, BOSSY launched a ski capsule collection featuring performance skiwear and luxurious après-ski items in signature colors. The collection combines technical functionality with contemporary sophistication and is available in select BOSSY stores and online.
On October 23, 2024, BOSSY announced that it has partnered with Laurastar to launch Laurastar by BOSS, a high-end steamer for luxury garment care that combines cutting-edge technology and minimalist design. This collection includes the versatile IZZI steamer and the portable IGGI steamer and is available online worldwide.
In terms of return on common stock over the past 12 months, BOSSY’s 16.93% is 58.8% higher than the industry average of 10.66%. The company’s trailing twelve month gross margin of 61.49% is 63.2% higher than the industry average of 37.7%. Similarly, the company’s trailing 12-month asset turnover ratio was 1.23x, which is 22.5% higher than the industry average of 1x.
BOSSY’s net sales for the third quarter ended September 30, 2024 were €1.03 billion ($1.09 billion), up slightly from the same period last year. Gross profit amounted to 619 million euros ($653.65 million). Net income and EPS for the period were EUR 56 million ($59.13 million) and EUR 0.79, respectively.
Analysts expect BOSSY’s fiscal 2025 sales to increase 4.1% year over year to $4.68 billion. It beat street revenue estimates in three of the subsequent four quarters. BOSSY stock has increased by 1.9% over the past three months, closing at $8.93.
BOSSY’s strong fundamentals are reflected in its POWR rating. According to our unique rating system, the overall rating is “A”, which is equivalent to “Strong Buy”.
It has an A grade for value and a B grade for growth, stability, and quality. Ranked #1 in the fashion & luxury industry. Click here to see BOSSY’s momentum and sentiment rating.
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RL stock rose $3.37 (+1.67%) in pre-market trading on Thursday. Year-to-date, RL has gained 44.39%, while the benchmark S&P 500 Index has gained 25.98% in 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…
