In this article we will look at the 11 Best Fashion Stocks To Buy Now. Let’s look at where Macy’s, Inc. (M) stands against other best fashion stocks to buy now.
Overview of the Global Fashion Industry
The global fashion industry is a force to reckon with as one of the largest industries across the globe. The global fashion retail market was worth $91.25 billion in 2023, as per a report by Zion Market Research. This market is anticipated to grow to $157.88 billion by 2032, at a compound annual growth rate of around 7.09% between 2024 and 2032.
According to the McKinsey report on The State of Fashion 2024, the fashion market in the US and Europe experienced slow growth in 2023. In comparison, China’s fashion market performed better in the first half of 2023 before gradually waning in the second half. The luxury segment, however, underwent considerable growth in the first half of 2024. But it, too, began to experience the effects of weaker demand in the second half of 2023.
According to McKinsey’s forecast, the global fashion industry is expected to undergo a top-line growth of between 2% and 4% in 2024. The luxury segment has a more optimistic outlook, with growth expectations reaching 3% to 5% globally.
However, with inflation consistently falling, the global fashion industry is expected to exceed expert estimates and make a solid comeback. The Federal Reserve also cut interest rates in September, its first cut since the COVID-19 pandemic, slashing half a percentage point off benchmark rates. These recent happenings are expected to positively impact the global fashion industry in general and the US fashion segment in particular, due to a potential increase in consumer spending.
The Global Fashion Industry: Potential Challenges and Future Outlook
However, despite the apparently optimistic landscape, the fashion industry is not immune to challenges. According to a survey by McKinsey & Company, 62% of executives cite geopolitical instability as the most prominent threat to fashion industry growth. In addition, around 55% of executives believe economic volatility is the largest hindrance to increased revenue. 51% consider inflation to be the primary cause behind this roadblock.
Expert opinion on the industry’s future outlook is also divided. While 37% of respondents believe the sector will likely stay the same, 38% expressed a pessimistic outlook, claiming that the industry will worsen with time. In contrast, 26% expressed hope and optimism, believing that the global fashion industry will likely come back. The survey also concluded that since cost-saving tactics across the industry have almost been exhausted, a more than 50% intent of raising prices stands.
Our Methodology
We first consulted stock screeners from Finviz and Yahoo Finance, along with online rankings, to create an initial list of 30 publicly traded fashion companies. From this list, we selected the 11 stocks with the highest number of hedge funds as of Q2 2024 and used that as our ranking metric.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
11 Best Fashion Stocks to Buy Now
Macy’s, Inc. (NYSE:M)
No. of Hedge Funds as of Q2 2024: 44
Macy’s (NYSE:M) is an omni-channel retail company that operates department stores selling apparel, accessories, cosmetics, home furnishings, and other consumer goods. Its brand portfolio includes Macy’s, Bloomingdale’s, and Bluemercury. It operates stores in 43 states, the District of Columbia, and Puerto Rico, and Guam. The company conducts its operations through Macy’s, Macy’s small format, Macy’s Backstage, Bloomingdale’s, Bloomingdale’s The Outlet, Bluemercury, and Bloomie’s.
It also holds a license agreement with Al Tayer Insignia to operate Bloomingdale’s in the United Arab Emirates and Kuwait. Macy’s principal private label brands include Alfani, Bar III, And Now This, Belgique, Aqua, Club Room, Charter Club, Family PJ’s, Epic Threads, Holiday Lane, Giani Bernini, Hotel Collection, Home Design, Ideology, Hudson Park, and others.
Macy’s (NYSE:M) is working to maximize profitability by closing down stores across the US with inadequate sales and opening small-format stores in their place. It plans to open around 30 new small-format stores through 2025, and recently hired more than 31,500 full and part-time employees for the upcoming holiday season.
To counter the effects of the change in consumer behavior on its sales, the company shifted its marketing calendar to balance value and fashion while aligning its assortments. It improved its promotions to deliver more personalized and targeted messages across brands and categories, invested in areas with proven product strength, and slashed its exposure to areas of softer demand. Such initiatives shifted the course of Macy’s (NYSE:M) business late in Q2, highlighting the resilience of the company’s operation model.
The company is also targeting weaknesses in men’s apparel, home, and handbags. In men’s clothing, it is focusing its attention on the contemporary, which it claims to be in a bright spot for growth. Macy’s (NYSE:M) also launched a new private brand that specifically targets customers under 40 in an attempt to elevate consumer engagement. It is also introducing diversity in its handbag collection to grow its portfolio.
As of Q2 2024, 44 hedge funds hold stakes in Macy’s (NYSE:M), with Arrowstreet Capital being the most prominent shareholder with 9.5 million shares. It ranks sixth on our list of the top fashion stocks to buy.
Overall, M ranks sixth among the best fashion stocks to buy now. While we acknowledge the potential of fashion companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than M but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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