The retail industry in 2025 has been doing surprisingly well. Growth has started to accelerate for many companies and AI is allowing a lot more efficiency in the supply chain. The macros have also cooperated with the retail industry as the strong labor market with positive wage growth has pushed more consumer spending.
Retailers are capitalizing on this by expanding into new markets and spending more on AI-powered supply chains and checkout systems. Plus, there’s chatter of interest rates coming down this year, especially with pressure from the Trump administration. This could boost the sector even more.
The convergence of these factors has created fertile ground for retail stocks. It is worth looking into those that have performed the best so far this year, as the market has rewarded these companies for good reasons.
A glossy storefront of a value retailer, filled with fashionable apparel and accessories.
Methodology
For this article, I screened the top-performing retail stocks year-to-date. Stocks that I have covered recently will be excluded from this list.
I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds invest in? 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).
15. Stitch Fix Inc (NASDAQ:SFIX)
Number of Hedge Fund Holders In Q3 2024: 15
Stitch Fix Inc (NASDAQ:SFIX) is an online personal styling company.
It has had a strong 2025 so far due to Q1 2025 earnings beating estimates and a guidance hike. Adjusted EBITDA came in at $13.5 million and gross margin expanded 180 bps year-over-year to 45.4%. Revenue per active client rose to 4.9% and offset an 18.6% year-over-year decline.
Plus, full-year 2025 guidance was raised to $25 million to $36 million in adjusted EBITDA. Moreover, it has seen a 23% reduction in warehouse costs and 21% lower styling costs per fix, along with SG&A expenses falling 18.1% year-over-year.
It now has a path to positive free cash flow and revenue growth, so investors seem quite optimistic.
The consensus price target of $3.96 implies 19.49% downside.
SFIX stock is up 14.15% year-to-date.
14. 1stdibs.com Inc (NASDAQ:DIBS)
Number of Hedge Fund Holders In Q3 2024: 11
1stdibs.com Inc (NASDAQ:DIBS) is an online marketplace for luxury design products.
The stock is up so much so far in 2025 due to its solid financial performance and growth momentum, along with bullish coverage from analysts.
Q3 2024 results showed revenue grew to $21.2 million at 3% year-over-year and the fiscal 2025 plan expects mid-single-digit revenue growth. Institutional investors have been buying the stock, with JPMorgan Chase boosting their holdings by 151.6% in Q3 2024, along with Barclays, Geode Capital, and State Street all increasing their stakes.
Regardless, the company is still unprofitable and profitability is unlikely in the near term.
The consensus price target of $8 implies 97.53% upside.
DIBS stock is up 14.41% year-to-date.
