In this article, we will look at the Top 11 Luxury Clothing Stocks to Invest in Now.
Overall View of Trends in the Luxury Sector
The luxury segment in retail has been a prominent driver of growth in the industry. It is primarily considered a status symbol, driving discretionary spending among customers with high purchasing power.
According to a report by Mordor Intelligence, the luxury retail sector has a market size of $110.13 billion as of 2024, and is expected to grow to $151.32 billion by 2029, at a compound annual growth rate of 6.56%. While the Asia-Pacific region is the fastest-growing market in the luxury retail domain, the largest market remains concentrated in Europe.
According to McKinsey’s The State of Fashion 2024 report, the global apparel industry is expected to experience top-line growth of 2%- 4% in 2024, with variations possible in countries and regions. Quite like in previous years, the luxury segment is anticipated to generate the most significant economic profit.
However, companies in the sector may experience a tough economic environment. Growth is anticipated to slow down to 3%- 5% in 2024 compared to 5%- 7% in 2023 as the post-pandemic shopping rush slows down. However, these growth trends are likely to be contrasting in Europe and the US. While growth is set to slow in China and Europe, it is expected to pick up speed in the US after a relatively weak 2023.
Distribution of luxury apparel and improved supply chains are some of the industry’s significant growth drivers. For example, Saudi Arabia’s General Authority for Competition approved the joint venture between G Distribution B.V. and Al Rubaiyat Co. for Industry & Trade Holding in December 2021 to sell and distribute Gucci products in the country. Digital media and digital marketing are also increasing the popularity of luxury clothing among millennials, which is, in turn, driving market growth.
A Slow First Half of 2024 for Luxury Retailers
Several luxury retailers experienced substantial profit drops in the first half of 2024. The overall market is experiencing widespread struggles, primarily because luxury brands have traditionally relied heavily on Chinese consumers. With the slowing Chinese economy and a cautious consumer base, this heavy reliance is proving unprofitable, as people are reducing their spending on luxury goods. The economic slowdown in China is attributed to factors such as lower land sales, an aging population, and decreased exports.
Despite the challenges, some brands made significant strides, such as the Italian high-fashion women’s clothing and accessory brand Miu Miu, which saw nearly 60% growth last year and 90% growth in the first quarter of this year. This helped its parent company, Prada Group, increase its sales as well.
The luxury market has historically bounced back from downturns, and many in the industry hope the current challenges are temporary. Luxury brands are comparatively less affected by economic conditions as most of their purchases are made by a very small group of elite consumers.
With these trends in mind, let’s examine the top 11 luxury clothing stocks to invest in now.
Photo by John Cameron on Unsplash
Our Methodology
For this article, we made a list of nearly 20 luxury stocks with positive analyst upside potential and used that as our primary metric to rank the list. We chose the top 11 stocks with the highest average analyst price target as of September 12, 2024. We have also considered the hedge fund sentiment around each stock as a secondary metric, and sourced data from Insider Monkey’s database of over 900 elite hedge funds as of Q2 2024.
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).
Top 11 Luxury Clothing Stocks to Invest in Now
11. Capri Holdings Limited (NYSE:CPRI)
Analyst Upside Potential as of September 12, 2024: 8.98%
No. of Hedge Funds as of Q2 2024: 52
Capri Holdings Limited (NYSE:CPRI) manages and operates globally popular luxury brands such as Jimmy Choo, Versace, Michael Kors, and others. It manufactures, markets, and distributes women’s and men’s apparel, accessories, footwear, and other items under its three segments: Michael Kors, Versace, and Jimmy Choo. The Versace segment includes luxury apparel, accessories, and footwear. It is directly operated through boutiques, outlet stores, and e-commerce sites across the Americas and certain parts of Europe, Africa, the Middle East, and Asia. Jimmy Choo’s segment covers luxury footwear, small leather goods, accessories, and handbags. The Michael Kors segment operates through four retail formats: lifestyle stores, e-commerce sites, collection stores, and outlet stores. It covers the sale of Michael Kors products.
Capri Holdings Limited (NYSE:CPRI) entered into a definitive agreement to be acquired by Tapestry Inc. (NYSE:TPR). However, the proposed transaction was blocked by the FTC in April. Capri (NYSE:CPRI) announced plans to vigorously defend the case, and is looking forward to the successful completion of the acquisition. It claims that the deal will not just deliver value to its shareholders, but will also provide new opportunities for its employees and customers.
Its Q1 fiscal 2025 earnings report showed continuing customer engagement across its three segments. Around 12.6 million new customers were added to its databases, showing that Capri Holdings’ (NYSE:CPRI) brands are continuing to resonate with consumers. These numbers represent a growth of 15% compared to last year, reflecting the value and strong brand equity of its three segments.
The stock is currently trading at a forward P/E of 15.68, a -0.70% discount to its sector. Its median price target of $38.54 implies an upside of 8.98% from current levels. 52 hedge funds hold stakes in the stock, with Pentwater Capital Management holding the highest stake, worth $100.92 million, as of Q2 2024. Capri Holdings (NYSE:CPRI) ranks 11th on our list of the top 11 luxury clothing stocks to invest in now.
10. Ralph Lauren Corporation (NYSE:RL)
Analyst Upside Potential as of September 12, 2024: 11.16%
No. of Hedge Funds as of Q2 2024: 36
Ralph Lauren (NYSE:RL) specializes in designing, marketing, and selling luxury lifestyle products, including apparel, footwear, accessories, fragrances, home, and hospitality. Its brands are spread across North America, Europe, and Asia. Its brand portfolio includes Ralph Lauren, Polo Ralph Lauren, Ralph Lauren Collection, Lauren Ralph Lauren, Ralph Lauren Purple Label, Double RL, and others. Apart from manufacturing luxury items for men, women, and children, the company’s hospitality segment includes restaurants like New York City’s The Polo Bar and Chicago’s RL Restaurant.
Ralph Lauren (NYSE:RL) is functioning on financial stability. Q1 fiscal 2025 results exceeded analyst expectations, with total revenue surpassing guidance by 3%. To continue positive growth trends, the company is investing in its strategic priorities, including digital capabilities, marketing, and ecosystem expansion. These investments, along with Ralph Lauren’s (NYSE:RL) increased efficiencies and culture of operating discipline, are expected to enable the company to drive its long-term sustainability growth.
Q1 fiscal 2025 saw continued growth across the company’s three strategic pillars. These pillars include elevating and revamping its lifestyle brand, winning key cities via its consumer ecosystem, and driving the core while expanding for more. As part of efforts to revamp its lifestyle brand, Ralph Lauren (NYSE:RL) has undertaken activities in London, Milan, New York, and across China, increasing its social media following in the process. It has also managed campaigns across key demographics and geographics, such as the women’s collection runway show in New York City in April and the Only Polo campaign. Local activations were also delivered across SoHo in New York, Dubai, Miami’s Design District, L.A.’s Sunset Boulevard, Roppongi in Tokyo, and Seoul. These efforts are helping the company leverage longer-term brand building while focusing on new customer acquisition and high-quality sales.
The stock is currently trading at a forward P/E of 15.52, at a 1.74% discount to its sector. It recently got a Buy rating from Evercore ISI, Barclays, Jefferies, and Telsey Advisory. Ralph Lauren’s (NYSE:RL) current price target of $179 implies an upside of 11.16% from current levels. It takes the tenth spot on our list of the top luxury clothing stocks.
9. Nike Inc. (NYSE:NKE)
Analyst Upside Potential as of September 12, 2024: 17.21%
No. of Hedge Funds as of Q2 2024: 66
Nike (NYSE:NKE) is a luxury retailer that designs, markets, and distributes athletic clothing, footwear, accessories, equipment, and services for fitness activities. It sells its athletic and fitness collection under several brands, including NIKE, Jordan Brand, and Converse. In addition, it specializes in casual apparel, footwear, and accessories, distributing and licensing them under the All-Star, Chuck Taylor, Star Chevron, One Star, and Jack Purcell trademarks.
Nike’s (NYSE:NKE) revenue grew by around 1% in fiscal 2024, with EPS increasing 15%. The company has undertaken several strategic shifts in the past year, including organization and leadership changes, capacity building for investment in consumer-facing activities, and starting a multi-year innovation cycle. But most of all, Nike’s (NYSE:NKE) sharp focus is on sports. It is scaling innovation and newness, fielding brand distinction to build momentum in its product portfolio.
Nike (NYSE:NKE) has had an Express Lane for years, allowing it to avail of short lead time replenishment and hyper-local design. The company has plans to continue leveraging its Express Lane to build new ways of working across the entire product development process. It is now calling it the Speed Lane, and is integrating it as a company-wide effort to use its resources to accelerate design, use advanced digital tools to expedite development, and leverage key manufacturing partners to quicken product production and testing. Speed Lane is expected to bring out innovations in the second half of the fiscal year, highlighting Nike’s (NYSE:NKE) efforts to gain momentum and solidify its position in the market in the long run. The company is also expected to roll out several new fitness and lifestyle franchises by leveraging its Speed Lane, widening its consumer base.
Nike (NYSE:NKE) also has plans to reinvest around $1 billion in consumer-facing activities in fiscal 2025. The investment is anticipated to expedite the company’s strong growth by increasing resources in merchandising, design, and product creation for its key sports dimensions. It will also speed up the company’s running in key cities, elevate its brand distinction in physical retail, and drive bolder, larger brand campaigns, starting from the Paris Olympics and EC ’24.
Mar Vista Focus strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its first quarter 2024 investor letter:
“NIKE, Inc.’s (NYSE:NKE) recent earnings report was a mixed bag. While revenue met expectations and earnings exceeded them, the stock price dipped due to management’s cautious outlook for fiscal 2025. The company is currently undergoing a period of internal restructuring and product line adjustments, which is expected to lead to flat revenue growth in the first half of the coming fiscal year. However, this transition aims to position Nike for long-term success.
Our conviction in Nike remains high, and we expect it to emerge stronger and more competitive once the restructuring is complete despite the softer revenue forecast. Nike still anticipates earnings will grow around 10% in calendar 2024 and will accelerate to 15% in 2025 as execution normalizes.”
8. Hermes (OTC:HESAY)
Analyst Upside Potential as of September 12, 2024: 17.44%
No. of Hedge Funds as of Q2 2024: N/A
Hermes (OTC:HESAY) is a France-based company that specializes in the design, manufacture, and marketing of luxury products. It operates its business through multiple segments, including Leather and Saddler, Ready-to-wear and Accessories, and Other Hermes, which includes jewelry and Hermes home products. The Other product segment also includes production activities that are held on behalf of non-group brands, as well as the John Lobb, Puiforcat, Saint-Louis, and Shang Xia products. It also manufactures the globally popular Birkin bags, which are not put on display in its stores and are only available to an elite segment of its consumers. Although the company is centered in France, Hermes International SCA manages operations in other countries in Europe, Asia, and the Americas, among others.
It recently reopened its renovated store in Melbourne, Australia, along with a renovated and expanded store in Nantes, an expanded store in Hong Kong, and a new store in Mitsukoshi Ginza, Tokyo, between June and September 2024. Hermes (OTC:HESAY) also reinforced its position in Mumbai, India, by opening a new store in April. Since the beginning of 2024, the company has regularly expanded its market presence by opening new stores and renovating and expanding previously existing ones.
Hermes (OTC:HESAY) is also continuing to invest in its production capacity, highlighting its strong plans for growth and increased profitability. On September 13, the company inaugurated its 23rd leather goods workshop in a completely renovated industrial heritage building in Riom, France, creating 280 local jobs in the process.
According to its half-year 2024 report, the Group’s consolidated revenue reached €7.5 billion, growing by 15% at constant exchange rates. All geographical areas experienced double-digital growth. Asia, excluding Japan, underwent a 10% growth in all countries of the region, while the Americas and Europe, excluding France, experienced growth of 13% and 18%, respectively. Japan’s local clients led a 22% growth, while France’s reached 15% due to customer loyalty and dynamic tourist flows.
Sales in the second quarter reached €3.7 billion, growing 13% at constant exchange rates and showing the company’s increasing profitability. Despite the challenging macroeconomic conditions, the loyalty of customers worldwide drove momentum across all regions except Asia, which was affected by an inflection in Greater China’s traffic. Hermes (OTC:HESAY) has a unique business model and is pursuing its long-term development strategies that build on maintaining control over know-how and boosting creativity. The stock ranks 8th on our list of the top 11 luxury clothing stocks to invest in now.
7. Tapestry, Inc. (NYSE:TPR)
Analyst Upside Potential as of September 12, 2024: 19.05%
No. of Hedge Funds as of Q2 2024: 32
Tapestry, Inc. (NYSE:TPR) operates an iconic global house of brands, including Coach, Kate Spade New York, and Stuart Weitzman. These brands specialize in manufacturing and distributing accessories and lifestyle collections, including handbags, jewelry, apparel, footwear, home decor, and more. Women’s accessories include leather accessories such as micro and mini handbags, wristlets, cosmetic cases, money pieces, and pouches. In addition, men’s items include small leather goods, watches, bag collections, apparel, and footwear. The high-end products are sold through the company’s direct-to-consumer, licensing, and wholesale businesses. Direct-to-consumer business includes outlet and retail stores, brand e-commerce sites, and concession shop-in-shops.
Tapestry, Inc. (NYSE:TPR) delivered a 1% total revenue growth on a constant currency basis in Q4 fiscal 2024, highlighting the positive effects of the company’s globally diversified business model. These positive results were led by a 6% international growth, with gains achieved in key regions. This includes a 14% growth in Europe, 5% in Japan, and 9% in Other Asia, collectively representing around 20% of the company’s sales and posing additional growth opportunities.
The company is focused on building and maintaining lasting customer relationships by cultivating emotional connections via its brands. This strategy has brought in more than 6.5 million new customers in North America alone, more than 50% of whom are millennials and Gen Z. These trends remain consistent with Tapestry’s efforts to expand its consumer base by including younger customers for its brands.
Tapestry Inc. (NYSE:TPR) has also improved lapsed customer reactivation in North America, showcasing its ability to maintain its existing customer base while striving for new customer engagement. The company also offers efficient omnichannel experiences to its customers, increasing brick-and-mortar sales for the year on a constant currency basis. With increased productivity being the primary driver of this growth, Tapestry Inc. (NYSE:TPR) boasts a highly profitable growth trajectory.
The stock has a consensus Buy rating from analysts, and its median price target of $42.56 implies an upside of 19.05% from current levels. It is currently trading at a forward P/E of 9.36, a 40.7% discount to its sector.
6. Oxford Industries, Inc. (NYSE:OXM)
Analyst Upside Potential as of September 12, 2024: 19.82%
No. of Hedge Funds as of Q2 2024: 15
Oxford Industries Inc. (NYSE:OXM) specializes in the apparel industry, running premium brands like Tommy Bahama, Lilly Pulitzer, Southern Tide, Johnny Was, Duck Head, and The Beaufort Bonnet Company. The company distributes its products through direct-to-consumer channels and wholesale channels. The direct-to-consumer channel includes brand-specific full-price retail stores, outlet stores, and e-commerce websites. In contrast, the wholesale distribution channel includes department stores, specialty stores, signature stores, and multi-brand e-commerce websites.
The company’s Tommy Bahama brand designs, markets, sources, and distributes men’s and women’s sportswear and related items, while the Lilly Pulitzer brand does the same for upscale women’s and girls’ apparel, sportswear, and related products. Oxford Industries Inc. (NYSE:OXM) also operates Tommy Bahama food and beverage locations, typically adjacent to the Tommy Bahama full-price retail stores.
Oxford Industries Inc. faced a slowdown in sales in Q2 2024, but made substantial progress on its long-term strategic goals. The dip in sales in the quarter was primarily driven by decreased conversion while traffic remained resilient. This indicates that while consumers were still interested in the company’s products, they had become cautious when making purchasing decisions. With inflation slowing down, the company is expected to get back on track and recover its sales.
There are several reasons for this optimism, including a strong balance sheet and exclusive initiatives by the company. The strong cash flow is allowing Oxford Industries Inc. (NYSE:OXM) to continue investing in its store pipeline and distribution centers. It is also set to create enthusiasm and excitement for its brands through special initiatives in the second half of 2024. These initiatives include new collections, including the Tommy Bahama Indigo Palms collection of denim and denim-friendly products, which launched early in Q3. Response to the launch has been promising, offering customers a brand assortment suitable for the cooler temperature. This will increase the company’s ability to stay relevant in the upcoming colder months, especially in the Mid-Atlantic, the Northeast, the Midwest, and the western wing of the country. 15 hedge funds hold stakes in OXM as of Q2 2024, with Millennium Management holding the highest stake worth $26.6 million. The stock ranks sixth on our list of the top luxury clothing stocks to invest in now.
5. Burberry Group (OTC:BURBY)
Analyst Upside Potential as of September 12, 2024: 26.07%
No. of Hedge Funds as of Q2 2024: N/A
Burberry Group (OTC:BURBY) is a UK-based global luxury goods manufacturer, wholesaler, and retailer. The company also licenses third parties to manufacture and distribute products using the Burberry trademarks. Burberry’s (OTC:BURBY) segments include retail/wholesale and licensing. The retail/wholesale segment specializes in luxury goods sales through Burberry mainline stores, outlets, concessions, and digital commerce, along with multi-brand specialty accounts, Burberry franchisees, and department stores worldwide. The company’s Licensing segment includes royalties from global licensees of eyewear, beauty products, and non-Burberry Japanese trademarks.
Burberry Group (OTC:BURBY) manages the flow of its global product between wholesale and retail channels and its retail region by monitoring and optimizing it at the corporate level. It implements the flow through the company’s inventory hubs, which are situated in the United States, Europe, mainland China, Special Administrative Regions of China, and Hong Kong.
The company is operating against a backdrop of dwindling demand for luxury goods and is impacted by macroeconomic uncertainty. However, it holds the potential to bounce back, with 422 directly operated stores and continuous growth plans. While the Chinese customer group fell in the high teens in Q1 fiscal 2025, it held up better than mainland China. Growth in Japan continued, driven primarily by nearshore Asian customers and strong tourism spending trends.
Burberry (OTC:BURBY) is now looking to make significant changes to drive growth. It is focusing on universal resonance, developing emotional connections with its previous and new customer groups. It is also expanding and enhancing its inclusive offering, with a clear focus on outerwear and other distinct market strengths. Burberry (OTC:BURBY) is also nurturing its customer base, maintaining relevance with fashion-forward customers. Its revenue has undergone an 8.19% compounded annual growth over the past three years. The stocks ranks fifth on our list of the top 11 luxury clothing stocks to invest in now.
4. Ermenegildo Zegna N.V. (NYSE:ZGN)
Analyst Upside Potential as of September 12, 2024: 28.46%
No. of Hedge Funds as of Q2 2024: 9
Ermenegildo Zegna N.V. (NYSE:ZGN) is a luxury brand that manufactures and designs menswear, leather goods, footwear, and other accessories under its Zegna and Thom Browne brands. It also offers luxury wear for women and children under the Thom Browne brand. However, it is famous for symbolizing iconic Italian luxury menswear. The company also acquired a long-term license for Tom Ford Fashion by the Estée Lauder Companies in 2023. Ermenegildo Zegna N.V. (NYSE:ZGN) operates a vast network of luxury flagship boutiques and concessions and has dressed famous world leaders and celebrities in its quest to solidify its image of Italian luxury. The company is continuing its partnership with Real Madrid, acting as their official luxury travel-wear partner for the 2023-2024 season and dressing one of the largest football teams in the world with its unique style.
The company opened up 24 new stores in Q1 2024, taking its total outlets to 277 globally. Its revenue stood at €463.2 million ($507.3 million), experiencing an 8% year-over-year increase. Revenues from the ZEGNA brand surpassed the growth of the overall segment, growing to €324.9 million ($355.86 million) in Q1 2024 from €319.3 million ($349.73 million) in Q1 2023. Overall, the Americas led the company’s revenues, with a rise in Direct-to-Consumer (DTC) sales being the primary driver.
The company’s revenue grew by a CAGR of 23.14% in the past three years. After delivering double-digital revenue growth in the Thom Browne and Zegna segments, the company has plans in place for continued growth. It is focused on streamlining its wholesale distribution and plans to fill out its management team at Tom Ford Fashion. Its operation plans and market presence give the company a significant edge in increasing its profitability in the long run.
Ermenegildo Zegna N.V. (NYSE:ZGN) ‘s median price target of $11.0 indicates an upside of 28.46% from current levels. The stock sports a Moderate Buy rating among analysts. 9 hedge funds hold Ermenegildo Zegna N.V. (NYSE:ZGN) as of Q2 2024.
3. LVMH (OTC:LVMUY)
Analyst Upside Potential as of September 12, 2024: 30.9%
No. of Hedge Funds as of Q2 2024: N/A
Louis Vuitton-Moët-Hennessy (OTC:LVMUY), more commonly known as LVMH, is one of the largest luxury companies in the world, with a market cap of around 306.058 billion. This France-based luxury group operates in six segments: Fashion and Leather Goods, Wines and Spirits, Watches and Jewellery, Perfumes and Cosmetics, and Selective Retail and Other Activities. These sectors give the Group ownership of several globally popular luxury brands, including Louis Vuitton, Christian Dior, Givenchy, Moet & Chandon, Benefit Cosmetics, Bulgari, Chamet and Fred, Sephora, Miami Cruiseline, and several others. The Group also partakes in Other activities, including the acquisition of the Pendemonte Group, a notable jewelry producer, and arts brands such as Cheval Blanc and others.
The Group has around 75 brands and operates more than 6,000 stores. In the past years, much of the Group’s growth has stemmed from mainland China, primarily because of the emerging upper class in the country. In addition, it continues to increase its global reputation and presence with an increase in a culture of conspicuous consumption. It ranks third on our list of the top 11 luxury clothing stocks to invest in now.
Despite the uncertain economic and geopolitical environment, LVMH (OTC:LVMUY) remained resilient. It recorded revenues of €41.7 billion in the first half of 2024, experiencing a 2% organic growth over the period. The United States and Europe underwent growth on a constant currency basis and consolidation scope. Similarly, Japan experienced a double-digital revenue growth, with the rest of Asia reflecting strong growth in spending as well, primarily due to Chinese customers in Japan and Europe. The Japanese market, in particular, underwent exceptional growth because Chinese customers made purchases in Japan due to the weakening yen. Organic revenue growth for the Group in Q2 2024 stood at 1%.
LVMH (OTC:LVMUY) boasts a robust profitability model, which is further strengthened by the global reputation of its numerous brands. The Group’s profit from recurring operations reached €10.7 billion for the first half of 2024, significantly exceeding pre-COVID operating margins. Overall, the Group experienced strong resilience across its six segments, solidifying its position as a world leader and highlighting its long-term roadmap for profitability. It also experienced a significant increase in its operating free cash flow, which exceeded €3 billion.
2. PVH Corp. (NYSE:PVH)
Analyst Upside Potential as of September 12, 2024: 38.39%
No. of Hedge Funds as of Q2 2024: 32
PVH Corp (NYSE:PVH) is a luxury fashion company that operates brands like Calvin Klein and Tommy Hilfiger. It specializes in designing and marketing casual apparel, sportswear, performance apparel, intimate apparel, accessories, handbags, footwear, and other related products. All of the company’s operations run through its operating divisions, which include Tommy Hilfiger North American, Tommy Hilfiger International, Calvin Klein International, Calvin Klein North America, and Heritage Brands Wholesale. PVH Corp (NYSE:PVH) sells its Tommy Hilfiger and Calvin Klein items through a number of distribution channels, including retail, wholesale, and licensing.
Due to the execution of its PVH+ Plan, the company is on track to deliver financial results according to expectations. It is leveraging its omnichannel execution to deliver its top-line guidance and has exceeded its EPS guidance, primarily because of the favorable settlement of a tax matter. The PVH+ Plan also focuses on enhancing shareholder value. The company repurchased $200 million worth of shares in Q1 and plans on further buybacks totaling $400 million for the year.
Revenue for the Tommy Hilfiger and Calvin Klein brands combined increased 1% last year, with modest wholesale sales growth. Under the PVH+ initiative, PVH Corp (NYSE:PVH) is continuously undertaking initiatives to boost sales, such as the recent transition of Tommy Hilfiger North America e-commerce distribution from outsourced to in-house. This transition has allowed the company to leverage open capacity, increasing service levels to its e-commerce consumers and delivering efficiencies.
PVH Corp (NYSE:PVH) has growth plans set in place for both Tommy and Calvin this fall. It is increasing consumer engagement with stronger campaigns featuring locally and globally relevant mega talents, such as collaborations with supermodel Kendal Jenner, actor Greta Lee, and K-pop talent Mingyu. Fall 2024 is also set to be the first product season where the company entirely influences product execution for both brands globally, offering strong transitional and innovative products and leaning into key growth categories. All these plans will be supported by continued enhancements in the company’s data and demand-driven supply chain. Such improvements are expected to increase stock freshness, lower AUC, and improve product quality.
Investors are bullish on PVH Corp (NYSE:PVH) due to its long-term growth objectives and profitability. It supports a consensus Buy rating from analysts, with Barclays maintaining a Buy rating on the stock. PVH Corp (NYSE:PVH) is currently trading at a forward P/E of 7.98 at a 49.08% discount to its sector. Its median price target of $93.95 implies an upside of 38.39% from current levels. It takes the second spot on our list of the top luxury clothing stocks to invest in now.
FPA Queens Road Small Cap Value Fund stated the following regarding PVH Corp. (NYSE:PVH) in its first quarter 2024 investor letter:
“PVH Corp. (NYSE:PVH) is an apparel company that owns the Tommy Hilfiger and Calvin Klein brands globally. Most of PVH’s earnings come from Europe, where the Tommy and Calvin brands are considered “almost luxury” and PVH has generally recorded high single-digit organic growth with demonstrated pricing power during the preceding decade. CEO Stefan Larsson has done an excellent job revitalizing the company and improving margins at PVH’s moribund U.S. operations. Over the past year, PVH and our other apparel companies have performed well as the worst fears for consumer spending didn’t play out. PVH has become a top five holding for us and our apparel holdings (PVH, GIII, LEVI and DECK) now make up almost 10% of the portfolio. On April 2, post quarter end, PVH announced fiscal 23Q4 results where they missed on earnings guidance for the coming year. The stock is down ~20% from its high but now trades at less than ten times forward earnings. We have held our position.”
1. Kering SA (OTC:PPRUY)
Analyst Upside Potential as of September 12, 2024: 1,281.60%
No. of Hedge Funds as of Q2 2024: N/A
Kering SA (OTC:PPRUY) is a France-based company that specializes in luxury products and manages several globally popular Houses in Fashion, Jewelry, and Leather Goods. These Houses include Gucci, Saint Laurent, Balenciaga, Bottega Veneta, Alexander McQueen, Brioni, DoDo, Pomellato, and Ginori 1735, along with Kering Beaute and Kering Eyewear. The Group primarily sells its products through retail stores and is actively working across the globe.
Kering SA holds a significant market presence and reputation for its high-end products. The company underwent a 5.37% compounded annual growth in its revenue over the last three years. It is currently trading at a forward P/E of 15.66, at a 5.91% premium to its sector. Kering SA (OTC:PPRUY) holds a significant competitive advantage due to its brands’ set reputation in the luxury apparel landscape. Its brand names of Gucci, Saint Laurent, and Balenciaga have become global household names. However, the company is experiencing a dip in its earnings due to the overall fall of the luxury market. Overall group revenue for the first half of 2024 came up to €9.0 billion, with sales from the directly operated retail network falling 12% in the first quarter. The primary reason behind these trends is the deceleration in the Asia-Pacific market. Despite this dip, the Group holds significant potential to make a comeback. Free cash flow from the company’s operations remained steadily high at €1.9 billion in the first half of 2024, significantly because of effective inventory management. This excludes real estate acquisitions, including acquiring a renowned property on New York City’s Fifth Avenue. The Group’s free cash flow from operations amounted to €1.1 billion, shedding a positive light on its profitability.
Gucci alone operates around 536 stores as of June 30, 2024. During the first half of 2024, the brand prioritized organic growth by maximizing the productivity of its existing network of stores, closing two in the process. It also undertook efforts to identify opportunities in global distribution, targeting high-growth sales channels and regions. These efforts are set to continue in the second half of 2024, boosting the company’s sales and further establishing it as a leader in the industry. The stock has an analyst upside potential of 1,281% as of September 12, 2024.
Overall, PPRUY ranks first among the top 11 luxury clothing stocks to invest in now. While we acknowledge the potential of luxury clothing 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 NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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