The increasing demand for online marketing, social media, and e-commerce platforms, which provide new avenues for brand exposure and sales, are driving the luxury market. Given the industry’s tailwinds, investors could consider buying fundamentally sound luxury stocks, Ralph Lauren Corporation (RL), Abercrombie & Fitch Co. (ANF), and Hugo Boss AG (BOSSY) amidst global demand.
The luxury goods market is experiencing a significant move towards sustainable practices, mainly driven by younger, socially aware consumers who value sustainability and ethical consumption. Therefore, the global luxury goods market is projected to grow at a CAGR of 6.6% by 2033.
Moreover, the growing wealth in emerging economies is fueling a significant rise in the consumption of luxury goods, especially in regions such as Asia Pacific, Africa, and Latin America. As disposable incomes rise and the middle class expands, consumer demand is shifting, with countries like China experiencing higher spending on high-end products.
Considering these encouraging trends, let’s take a look at the fundamentals of the three best Fashion & Luxury stocks, starting with #3.
Stock #3: Ralph Lauren Corporation (RL)
RL is engaged in the design, marketing, and distribution of luxury lifestyle products internationally, including apparel, footwear & accessories, home, fragrances, eyewear, fine jewelry, and hospitality. The company operates through three segments: North America; Europe; and Asia.
RL’s trailing-12-month net income margin and EBIT margins of 10.15% and 12.42% are 132.9% and 54.1% higher than the respective industry averages of 4.36% and 8.06%.
For the fiscal 2025 second quarter that ended on September 28, RL’s net revenues increased 5.7% year-over-year to $1.73 billion, while its Asia segment’s net revenue improved 9.1% from the prior year’s value to $380.20 million. Its gross profit rose 8% year-over-year to $1.16 billion. Moreover, the company’s net income amounted to $147.90 million, or $2.31 per share, reflecting increases of 0.7% and 5.5% year-over-year, respectively.
Analysts expect RL’s revenue for the fiscal third quarter ended December 2024 to increase 4.1% year-over-year to $2.01 billion. Its EPS is expected to grow 8.5% year-over-year to $4.53. The company surpassed its revenue and EPS estimates in each of the trailing four quarters, which is promising.
RL’s stock has gained 67.1% over the past year to close the last trading session at $246.85.
RL’s POWR Ratings reflect its positive 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.
The stock has an A grade for Quality and a B for Sentiment. It is ranked #14 out of 59 stocks in the Fashion & Luxury industry.
Beyond what is stated above, we’ve also rated RL for Growth, Momentum, Stability, and Value. Get all RL ratings here.
Stock #2: Abercrombie & Fitch Co. (ANF)
ANF is a global specialty retailer that offers an assortment of apparel, personal care products, and accessories for men, women, and kids. The company operates under the Abercrombie & Fitch, Abercrombie kids, Hollister, and Gilly Hicks brands, delivering high-quality, comfortable products catering to diverse lifestyle needs.
On December 4, 2024, ANF announced a strategic multi-year franchise partnership with Myntra Jabong India Private Ltd., the business-to-business wholesale arm of Myntra. This collaboration aims to strengthen ANF’s global presence by leveraging India’s growing e-commerce market to drive brand accessibility and revenue growth.
ANF’s trailing-12-month gross profit margin of 64.66% is 71% higher than the industry average of 37.82%. Its 14.84% trailing-12-month EBIT margin is 84% higher than the 8.06% industry average. Likewise, its 50.86% trailing-12-month Return on Common Equity compares favorably to the industry average of 10.63%.
During the fiscal third quarter that ended November 2, 2024, ANF’s net sales increased 14.4% year-over-year to $1.21 billion. Its adjusted operating income grew 25.4% from the year-ago value to $179.28 million. Its net income amounted to $133.86 million, reflecting an increase of 37% from the prior year quarter. In addition, the company’s adjusted EPS came in at $2.50, up 31.6% year-over-year.
Analysts expect ANF’s EPS and revenue for the fourth quarter ended January 31, 2025, to increase 19.6% and 7.8% year-over-year to $3.55 and $1.57 billion, respectively. The company has an impressive surprise history, surpassing the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 4.9% to close the last trading session at $114.80.
ANF’s POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
ANF has an A grade for Quality and a B for Sentiment. It is ranked #7 in the same industry.
In addition to the POWR Ratings highlighted above, one can access ANF’s ratings for Momentum, Stability, Growth, and Value here.
Stock #1: Hugo Boss AG (BOSSY)
BOSSY is headquartered in Metzingen, Germany, and designs and markets apparel, footwear, and accessories under its BOSS and HUGO brands. It also offers licensed products like fragrances and eyewear, distributing through stores, franchises, and online platforms globally.
On December 11, BOSSY announced the launch of Eightyards, an independent corporation focused on recycling and reusing surplus materials, aligning with its sustainability goals.
BOSSY’s trailing-12-month asset turnover ratio of 1.23x is 23% higher than the industry average of 1x. Its 8.30% trailing-12-month EBIT margin is 3% higher than the 8.06% industry average.
BOSSY’s sales increased marginally year-over-year to €1.03 billion ($1.07 billion) in the fiscal third quarter that ended on September 30, 2024. Its gross profit came in at €619 million ($640.18 million). In addition, the company’s net income attributable to shareholders reached €55 million ($56.88 million), and EPS reached €0.79, respectively.
Street expects BOSSY’s revenue for the fiscal fourth quarter that ended on December 31, 2024, to be $1.25 billion. It surpassed the consensus revenue estimates in three of the trailing four quarters.
Over the past month, the stock has gained 1.6% to close the last trading session at $9.12.
BOSSY’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth, Stability, and Quality. It is ranked #2 in the same industry.
Click here to access the additional BOSSY ratings (Momentum and Sentiment).
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RL shares were trading at $248.97 per share on Wednesday afternoon, up $2.12 (+0.86%). Year-to-date, RL has gained 7.79%, versus a 2.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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