The luxury fashion market is experiencing a significant boom, and boutique fashion stocks are reaping the rewards. Unlike mass-market retailers, boutique fashion brands cater to niche, high-end consumers who value exclusivity, craftsmanship, and premium designs.
Given the industry’s robust prospects, investors might consider investing in three fundamentally stable boutique fashion stocks, Levi Strauss & Co. (LEVI), Kontoor Brands, Inc. (KTB), and Wolverine World Wide, Inc. (WWW), for unprecedented gains.
As global wealth rises and affluent shoppers seek unique styles, consumers are shifting more towards personalized and limited-edition products. High-net-worth individuals prefer bespoke fashion, and boutique brands that offer exclusivity are thriving.
Hence, companies are also focusing on premium materials, artisanal craftsmanship, and tailored experiences. According to Epsilon, 80% of consumers are more likely to make a purchase when brands offer personalized experiences.
As per Statista, the global luxury goods market is anticipated to reach $92.98 billion by 2029, exhibiting a CAGR of 9.7%. The combination of exclusivity, digital innovation, and global expansion makes these stocks a compelling opportunity.
With that in mind, let’s look at the fundamentals of the above-mentioned stocks:
Levi Strauss & Co. (LEVI)
LEVI is an apparel company that designs and markets jeans, casual wear, and related accessories for men, women, and children under the Levi's, Signature by Levi Strauss & Co., Denizen, Dockers, and Beyond Yoga brands.
In terms of the trailing-12-month gross profit margin, LEVI’s 59.09% is 55.6% higher than the 37.98% industry average. Similarly, its 9.98% trailing-12-month levered FCF margin is 122.4% higher than the industry average of 4.49%. Also, its trailing-12-month ROTC of 8.82% compares to the industry average of 6.25%.
In the fiscal third quarter that ended on December 1, 2024, LEVI’s net revenues increased 12% year-over-year, amounting to $1.84 billion. The company reported a gross profit of $1.12 billion, indicating an 18.7% growth from the prior-year quarter.
Its adjusted EBITDA grew 24.4% from the prior-year quarter to $301.2 million. Its attributable adjusted net income came in at $202.2 million, and its adjusted EPS was $0.91 per share, up 13.2% and 13.6% year-over-year, respectively.
As per the financial outlook for the fourth quarter of fiscal 2025, LEVI forecasts revenue growth to be in the range of 3.5% to 4.5%. The company also expects an adjusted EPS to be between $1.20 and $1.25.
The consensus revenue estimate of $1.63 billion for the fiscal first quarter (ending February 2025) represents a 4.3% increase year-over-year. The consensus EPS estimate of $0.30 for the same quarter indicates a 16.2% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has surged 9.1%, closing the last trading session at $18.09.
LEVI’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
LEVI has a B grade for Growth, Sentiment, and Quality. It is ranked #5 out of 86 stocks in the Consumer Goods industry. Click here to see the additional ratings for LEVI (Value, Momentum, and Stability).
Kontoor Brands, Inc. (KTB)
KTB, a lifestyle apparel company, designs, produces, procures, markets, distributes, and licenses denim, apparel, footwear, and accessories. The company operates through two segments: Wrangler and Lee.
KTB's trailing-12-month ROCE and ROTA of 71.14% and 15.16% are 572.3% and 290.98% higher than their respective industry averages of 10.58% and 3.88%. Likewise, its trailing-12-month net income margin of 9.72% is 124.3% above the industry average of 4.33%.
For the third quarter that ended on September 28, KTB’s net sales amounted to $670.19 million, reflecting an increase of 2.4% year-over-year. It posted an operating income of $98.32 million, indicating a 15% increase from the prior-year quarter. In addition, the company’s net income came in at $70.55 million, up 18.5% year-over-year, while its earnings per common share rose 20% from the year-ago value to $1.26.
Per the updated financial outlook for the full year 2024, KTB forecasts revenue to be approximately $2.60 billion. The company expects adjusted operating income to be $385 million. Also, its adjusted EPS is forecasted to be $4.83.
Street expects KTB’s revenue for the fiscal fourth quarter (ended December 2024) to increase 4.1% year-over-year to $697.03 million. Its EPS for the same period is expected to register a 3.6% growth from the prior year, settling at $1.33. Meanwhile, it surpassed the revenue and EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 51.1% over the past year and 45.3% over the past nine months to close the last trading session at $92.88.
KTB’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has a B grade for Quality. Within the B-rated Fashion & Luxury industry, it is ranked #6 out of 59 stocks. Click here to see KTB’s ratings for Growth, Value, Momentum, Stability, and Sentiment.
Wolverine World Wide, Inc. (WWW)
WWW is a designer, marketer, and licensor of a range of quality casual footwear and apparel, performance outdoor and athletic footwear and apparel, kids' footwear, industrial work boots and apparel, and uniform shoes and boots. The company operates through two segments: Active Group and Work Group.
On November 19, Sweaty Betty, the London-based women's activewear brand owned by WWW, opened two new stores in the United States. This opening marks an opportunity for the company to expand its global footprint.
In the same month, WWW announced the opening of its new global Innovation Hub in Boston. This 11,000-square-foot hub facility should encourage creativity, collaboration, and innovation for the future of the company.
The stock’s trailing-12-month gross profit margin of 42.35% is 11.5% higher than the industry average of 37.98%. Similarly, its 18.84% trailing-12-month levered FCF is 319.7% above the industry average of 4.49%.
WWW’s net sales for the third quarter, which ended on September 28, 2024, amounted to $440.2 million, and its operating profit rose 28.9% from the prior-year period to $35.2 billion. The company’s net earnings attributable for the period stood at $23.6 million, up 174.4% year-over-year, while its EPS grew 154.5% from the year-ago value to $0.28.
According to the company’s updated fiscal year 2024 guidance, WWW expects GAAP revenue to be in the range of $1.735 billion and $1.750 billion. Its non-GAAP net earnings are expected to lie between $67 million and $74 million. The company’s non-GAAP EPS is set in the range of $0.80 to $0.90.
Analysts expect WWW’s revenue for the first quarter (ending March 2025) to increase 8.5% year-over-year to $428.63 million, while its EPS for the same period is expected to grow 408.6% from the prior year to $0.25. Moreover, it topped Street revenue estimates in three of the trailing four quarters, which is promising.
Shares of WWW have surged 168.2% over the past year and 115.5% over the past nine months to close the last trading session at $23.12.
It’s no surprise that WWW has an overall rating of B, equating to a Buy in our POWR Ratings system. It has an A grade for Growth. Out of 33 stocks in the Athletics & Recreation industry, WWW is ranked #6.
Beyond what is stated above, we’ve also rated WWW for Value, Momentum, Stability, Sentiment, and Quality. Get all WWW’s ratings here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
LEVI shares were trading at $18.37 per share on Thursday afternoon, up $0.28 (+1.55%). Year-to-date, LEVI has gained 6.18%, versus a 3.07% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
