As the retail industry rebounds, apparel companies are increasingly capitalizing on emerging trends such as sustainability, personalization, and expansion into the metaverse. This shift presents significant opportunities for growth, making companies like Ross Stores, Inc. (ROST), Nordstrom, Inc. (JWN), and J.Jill, Inc. (JILL) attractive options for investors looking to capitalize on the evolving retail landscape.

U.S. retail sales increased by 0.4% in September, surpassing economists’ forecast of 0.3%. Additionally, the rise of online shopping, coupled with trends toward sustainability, omnichannel engagement, and values-driven purchasing, underscores how major retailers are adapting to meet shifting consumer expectations.

The apparel market is set for strong growth, driven by e-commerce expansion, rising incomes, and a shift toward branded, especially luxury, products. The women’s apparel segment benefits from more women in the workforce, and evolving fashion trends keep the mature market competitive, with companies forming alliances and using strategic advertising to boost revenue. The apparel market is projected to grow from $1.36 trillion in 2024 to $1.78 trillion by 2029, exhibiting a robust CAGR of 4.6%.

Considering these conducive trends, let’s examine the Fashion & Luxury stocks in detail.

Stock #3: Ross Stores, Inc. (ROST)

ROST, through its subsidiaries, operates off-price retail stores under the Ross Dress for Less and dd’s DISCOUNTS brands in the U.S., offering apparel, accessories, footwear, and home fashions at discounted prices.

On October 21, ROST expanded its presence with 43 new Ross Dress for Less and four dd's DISCOUNTS stores across 22 states, completing its 2024 growth plan of 89 new locations. This expansion supports Ross's goal of increasing market reach, with long-term plans to reach 2,900 Ross and 700 dd's DISCOUNTS stores nationwide.

On August 21, 2024, ROST declared a quarterly cash dividend of $0.3675 per share, payable on September 30, 2024. It pays an annual dividend of $1.47, which translates to a dividend yield of 1.03% at the prevailing price levels, higher than the four-year average yield of 0.95%.

During the fiscal second quarter that ended August 3, 2024, ROST’s sales increased 7.1% year-over-year to $5.29 billion. In addition, the company’s net income and EPS came in at $527.15 million and $1.59, up 18.2% and 20.5% over the prior-year quarter, respectively.

Analysts expect ROST’s EPS and revenue for the quarter ended October 31, 2024, to increase 6.6% and 5% year-over-year to $1.42 and $5.17 billion, respectively. It surpassed the Street EPS and revenue estimates in each of the trailing four quarters, which is impressive.

Over the past year, the stock has gained 17.4% to close the last trading session at $142.32. It soared 2.8% year-to-date.

ROST’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

ROST has a B grade in Sentiment and Quality. It is ranked #18 out of 61 stocks in the B-rated Fashion & Luxury industry.

Beyond what we have stated above, we also have given ROST grades for Growth, Momentum, Stability and Value. Get all the ROST’s ratings here.

Stock #2: Nordstrom, Inc. (JWN)

JWN is a fashion retailer offering apparel, shoes, beauty, accessories, and home goods for all ages through its Nordstrom and Nordstrom Rack stores, online platforms, and Last Chance clearance outlets.

On September 4, 2024, the special committee of JWN, Board of Directors confirmed receiving a proposal from Erik and Pete Nordstrom, along with other family members and El Puerto de Liverpool, S.A.B. de C.V to acquire all outstanding shares of the company which excludes those held by the Nordstrom family and Liverpool, for $23.00 per share in cash.

On September 18, JWN announced that its Board of Directors approved a quarterly dividend of 19 cents per share. It pays an annual dividend of $0.76, which translates to a dividend yield of 3.32% at the prevailing price levels.

In the fiscal first quarter ended August 31, 2024, JWN’s net sales increased 3.4% year-over-year to $3.79 billion. Its total revenues rose 3.2% from the prior-year quarter to $3.89 billion.  Moreover, its net earnings were $122 million, and adjusted EPS stood at $0.96, up 14.3% year over year.

Street expects JWN’s for the third quarter ending October 31, 2024, to increase marginally year-over-year to 3.34 billion. Its EPS for the same quarter is expected to be $0.22. It surpassed the consensus revenue estimates in three of the past four quarters.

The stock climbed 53.5% and 23.1% year-to-date to close the last trading session at $22.72.

JWN’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.

It has a B for Value and Quality. It is ranked #6 in the same industry.

To access JWN’s Growth, Momentum, Stability, and Sentiment ratings, click here.

Stock #1: J.Jill, Inc. (JILL)

JILL is an omnichannel retailer offering women’s apparel, footwear, and accessories under the J.Jill brand across the U.S. It reaches customers through retail stores, its website, and catalogues.

On October 2, JILL paid a quarterly cash dividend of $0.07 per share The company pays an annual dividend of $0.28, which translates to a dividend yield of 1.17% at the prevailing price levels, which is higher than its four-year dividend yield of 0.04%.

JILL reported a net sales of $155.24 million in the fiscal 2024 second quarter that ended on August 3, 2024. Its adjusted income from operations amounted to $24.94 million, while its adjusted net income amounted to $15.83 million. The adjusted net income per share reported during this period is $1.05

Street expects JILL’s revenue for the fiscal third quarter (ended October 2024) to increase marginally year-over-year to $151.02 million. Its EPS for the same quarter is expected to grow 2.1% from the prior year to $0.80.

Shares of JILL have gained 5.5% over the past nine months to close the last trading session at $24.77.

JILL’s bright prospects are apparent in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has an A in Quality and a B grade for Value and Sentiment. Within the same industry, it is ranked #3.

Click here to see JILL’s ratings for Momentum, Stability, and Growth.

What To Do Next?

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ROST shares rose $3.31 (+2.33%) in premarket trading Wednesday. Year-to-date, ROST has gained 3.61%, versus a 22.48% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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