The growing economy is opening exponential opportunities for numerous industries like the luxury goods industry. The luxury market is positioned for continued demand from consumers owing to the increasing disposable income and demand for exclusivity.
Given this backdrop, considering quality luxury brand stocks PVH Corp. (PVH), Ralph Lauren Corporation (RL), and Brilliant Earth Group, Inc. (BRLT) gaining value could be suitable.
Prior to evaluating the fundamentals of these stocks, let's glimpse into the current happenings within the industry.
During the fourth quarter of 2024, the U.S. real gross domestic product (GDP) increased at an annual rate of 2.3%, propelled by consumer spending and government spending. Further, in December 2024, personal income increased by $92 billion or 0.4% at a monthly rate, compared to $60 billion or 0.3% during December 2023.
Disposable personal income was up $79.7 billion or 0.4%, and personal consumption expenditures rose $133.6 billion or 0.7% in the same month. Such factors as strong economic growth, growing consumer spending, and favorable borrowing costs are booming various sectors, including the luxury brands and products market.
As consumer spending capacity rises, consumers are leaning more towards luxury items. The prevailing trends of social media, online marketing, and e-commerce development are further influencing consumer behavior.
Besides, recently, robust demand for exclusivity among consumers has been growing, especially among millennials and Gen Z consumers. Thus, resulting in luxury brands adapting strategies to cater to this trend and focus on improved experiences, personalized services, and attempts to engage customers at deeper level.
With this, the global luxury goods market is projected to reach an estimated value of $480.54 billion by 2033, exhibiting growth at a CAGR of 6.6%. Further, in the U.S., revenue in the luxury goods market is expected to be $101 billion in 2025.
Considering the industry’s conducive trends, let’s discuss the three Fashion & Luxury stock picks, starting with the third choice.
Stock #3: PVH Corp. (PVH)
PVH is an international apparel company. It operates in six segments: Tommy Hilfiger North America; Tommy Hilfiger International; Calvin Klein North America; Calvin Klein International; and Heritage Brands Wholesale. The company designs and markets men's, women's, and children's apparel and accessories.
On January 21, 2025, PVH’s wholly owned subsidiary, Tommy Hilfiger, entered into a license agreement with Revman International, Inc. to develop, manufacture, and distribute new home accessories in the U.S., Canada, and Mexico. The home collection will be launched in spring.
The new development will reinforce the TOMMY HILFIGER brand in the home category through an elevated and expanded consumer offering.
On October 30, 2024, PVH’s Board of Directors declared a quarterly cash dividend of $0.0375 per share, which was paid on December 18, 2024, to stockholders of record on November 27, 2024.
The stock pays a $0.15 per share dividend annually, which translates to a 0.19% yield on the current price. Its four-year average dividend yield is 0.13%. Also, its dividend payments have grown at a CAGR of 58.7% over the past three years.
For the third quarter that ended November 3, 2024, PVH posted total revenue of $2.26 billion, and its gross profit totaled $1.32 billion. The company’s Net income on a non-GAAP basis amounted to $170.50 million, while its net income per common share on a non-GAAP basis grew 4.5% from the year-ago value to $3.03.
For the fourth quarter of 2024, the company expects net income per common share on a non-GAAP basis between $11.55 and $11.70. Also, the company raised its full-year guidance for net income per common share on a non-GAAP basis to $3.05 to $3.20 from the prior guidance of $2.50.
Street expects PVH’s revenue and EPS for the fiscal year (ending January 2026) to increase 0.8% and 3.4% year-over-year to $8.69 billion and $12.10, respectively. Also, the company has topped the consensus revenue and EPS estimates in all four trailing quarters, which is remarkable.
Shares of PVH have plunged 15.5% over the past six months to close the last trading session at $78.85.
PVH’s solid fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
PVH has an A grade for Value and a B for Quality. It is ranked #23 out of 60 stocks in the B-rated Fashion & Luxury industry.
In addition to the POWR Ratings we’ve stated above, we also have PVH ratings for Growth, Momentum, Sentiment, and Stability. Get all PVH ratings here.
Stock #2: Ralph Lauren Corporation (RL)
RL designs, markets, and distributes lifestyle products internationally. It offers apparel, footwear and accessories, home products, and fragrances. The company sells apparel and accessories under brands like Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Golf Ralph Lauren, and Ralph Lauren Golf.
On December 13, 2024, RL’s Board of Directors declared a regular quarterly dividend of $0.825 per share on its common stock. The dividend was paid on January 10, 2025, to shareholders of record at the close of business on December 27, 2024.
RL pays an annual dividend of $3.30, which translates to a yield of 1.23% at the current share price. Its four-year average dividend yield is 1.88%. Moreover, the company’s dividend payouts have increased at a CAGR of 16.1% over the past three years.
For the third quarter, which ended December 28, 2024, RL’s net revenues increased 10.8% year-over-year to $2.14 billion. The company’s adjusted gross profit grew 14.1% from the year-ago value to $1.47 billion. Its adjusted operating income rose 26.6% year-over-year to $401.90 million.
In addition, the company’s adjusted net income came in at $307.90 million and $4.82 per share, up 11.9% and 15.6% from the prior year’s quarter, respectively.
Street expects RL’s revenue and EPS for the fourth quarter (ending March 2025) to increase 4.7% and 19.1% year-over-year to $1.64 billion and $2.04, respectively. Moreover, the company has surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 68.7% and 82.8% over the past year to close the last trading session at $268.95.
RL’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.
The stock has an A grade for Quality and a B grade for Growth. Within the B-rated Fashion & Luxury industry, RL is ranked #12 of 60 stocks.
Click here to access additional ratings of RL for Sentiment, Momentum, Stability, and Value.
Stock #1: Brilliant Earth Group, Inc. (BRLT)
BRLT designs, procures, and sells diamonds, gemstones, and jewelry internationally. The company's product assortment and merchandise comprises of collection of diamond engagement rings, wedding and anniversary rings, gemstone rings, and fine jewelry.
On November 12, 2024, BRLT opened its first street-level showroom in New York City, located at 255 Elizabeth Street in Nolita. The showroom expanded the company’s retail footprint to four locations in the New York Metropolitan area and expanded the overall BRLT showroom fleet to 39.
Also, on September 19, 2024, the company opened two new street-level showrooms in Boston and completed the renovation of its Newbury Street location. The strategic expansion of its retail fleet delivers a personalized shopping experience to customers and widens its customer base.
During the third quarter that ended September 30, 2024, BRLT reported net sales of $99.87 million, and its gross profit was $60.77 million for the quarter. The company’s adjusted net income and adjusted EPS amounted to $1.49 million and $0.02 for the quarter, respectively.
Furthermore, the company’s cash and cash equivalents and total assets stood at $152.65 million and $273.25 million as of September 30, 2024.
Analysts expect BRLT’s revenue for the fiscal year (ending December 2025) to increase 1% year-over-year to $423.80 million, while its EPS is expected to grow 17.7% year-over-year to $0.08. Furthermore, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
BRLT's stock has slipped 21.8% over the past month to close the last trading session at $1.58.
BRLT’s optimistic fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has an A grade for Value. It also has a B grade for Sentiment and Quality. BRLT is ranked #7 among the 60 stocks in the B-rated Fashion & Luxury industry.
Click here to access BRLT’s additional ratings for Growth, Stability, and Momentum.
What To Do Next?
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RL shares were trading at $268.85 per share on Monday afternoon, down $0.10 (-0.04%). Year-to-date, RL has gained 16.40%, versus a 3.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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