Luxury brand stocks have demonstrated remarkable resilience even in the face of economic uncertainty. While consumer spending may slow in broader retail segments, high-end brands continue to thrive due to their strong brand equity and loyal customer base.
Therefore, it could be considered wise for investors to add well-positioned luxury brand stocks, Ferrari N.V. (RACE), Ralph Lauren Corporation (RL), and Hugo Boss AG (BOSSY) for steady revenue growth.
Amidst market volatility in the market, luxury brands have maintained pricing powers and high-profit margins. These brands benefit from enduring competitive advantages, including strong brand heritage, exclusivity, and a loyal customer base less susceptible to economic fluctuations. Also, the sector’s commitment to craftsmanship, innovation, and maintaining a mystique around their offerings creates high barriers to entry, safeguarding their market positions against new competitors.
Innovation and digital transformation have played critical roles in sustaining the growth of luxury brands. The adoption of digital strategies and omnichannel retailing enables these brands to reach wider audiences and engage younger consumers while bolstering global expansion.
Furthermore, the global luxury goods market is anticipated to reach $480.54 billion by 2033, exhibiting a CAGR of 6.6%. Such growth is driven by brands having successfully localized their offerings and marketing strategies, strengthening their position in diverse markets around the world.
Considering these encouraging trends, let’s take a look at the fundamentals of the above-mentioned stocks.
Ferrari N.V. (RACE)
Based in Maranello, Italy, RACE engages in the design, engineering, production, and sale of luxury performance sports cars worldwide. It also provides spare parts, engines, after-sale services, repair, maintenance, and restoration services for cars. It licenses its Ferrari brand to various producers and retailers of luxury and lifestyle goods.
The stock’s trailing-12-month net income margin of 22.85% is 441.8% higher than the industry average of 4.22%. Similarly, its 47.58% trailing-12-month ROCE is 328.9% above the industry average of 11.91%. Also, its trailing-12-month ROTA of 15.79% compares favorably to the industry average of 3.82%.
RACE’s net revenues for the fiscal fourth quarter that ended December 31, 2024, increased 14% year-over-year to €1.74 billion ($1.80 billion). Its operating profit grew 25.8% from the year-ago value to €468 million ($485 million) with an operating profit margin of 27% (up 260 bps year-over-year).
The company’s EBITDA rose 15.2% from the prior-year quarter to €643 million ($666.88 million). Moreover, its net profit came in at €386 million ($400.34 million), indicating a 31.3% growth from the prior-year quarter period, and its EPS was €2.14 per share, up 32.1% year-over-year.
The consensus revenue estimate of $1.85 billion for the fiscal first quarter (ending March 2025) represents an 8.3% increase year-over-year. The consensus EPS estimate of $2.36 for the about-to-be-reported quarter indicates a 12.6% improvement year-over-year. The company has an excellent surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 25.2%, closing the last trading session at $503.43.
RACE’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.
RACE has an A grade for Quality and a B for Stability and Sentiment. It is ranked #14 out of 47 stocks in the Auto & Vehicle Manufacturers industry. Click here to see the additional ratings for RACE (Growth, Value, and Momentum).
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.
In terms of the trailing-12-month net income margin, RL’s 10.14% is 140.4% higher than the 4.22% industry average. Similarly, its 11.87% trailing-12-month levered FCF margin is 158.4% higher than the industry average of 4.59%. Also, its trailing-12-month ROCE of 27.57% compares to the industry average of 11.09%.
For the fiscal 2025 third quarter that ended on December 28, RL’s net revenues increased 10.8% year-over-year to $2.14 billion, while its Europe segment’s net revenue improved 15.9% from the prior year’s value to $604.4 million. Its operating income rose 22.7% year-over-year to $389.7 billion. Moreover, the company’s net income amounted to $297.4 million, or $4.66 per share, reflecting increases of 7.5% and 11.2% year-over-year, respectively.
Analysts expect RL’s revenue for the fourth quarter (ending March 2025) to increase 4.8% year-over-year to $1.64 billion, while its EPS for the same period is expected to grow 18.5% from the prior year to $2.03. Moreover, it topped Street revenue and EPS estimates in each of the trailing four quarters, which is excellent.
Shares of RL have surged 65.3% over the past nine months and 50.9% over the past year to close the last trading session at $277.68.
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.
It also has an A grade for Quality and a B for Growth and Sentiment. Within the B-rated Fashion & Luxury industry, it is ranked #7 out of 59 stocks. Click here to see RL’s ratings for Value, Momentum, and Stability.
Hugo Boss AG (BOSSY)
Headquartered in Metzingen, Germany, BOSSY globally markets and sells apparel, shoes, and accessories for men and women under the BOSS and HUGO brand names. It also offers licensed products like fragrances and eyewear, distributing through stores, franchises, and online platforms.
BOSSY's trailing-12-month ROCE and ROTA of 16.93% and 6.03% are 52.6% and 57.9% higher than their respective industry averages of 11.09% and 3.82%. Likewise, its trailing-12-month gross profit margin of 61.49% is 63.3% above the industry average of 37.65%.
During the third quarter ended September 30, 2024, BOSSY’s sales increased marginally year-over-year to €1.03 billion ($1.07 billion), while its gross profit amounted to €619 million ($647.29 million). The company’s net income came in at €56 million ($58.56 million), while its EPS stood at €0.79.
Street expects BOSSY’s revenue for the fiscal year 2024, which ended December 2024, to be $4.46 billion. For the fiscal year 2025, its revenue is expected to grow 4.2% from the prior year to $4.64 billion.
The stock has surged 10.4% over the past six months and 8.9% over the past three months to close the last trading session at $9.23.
BOSSY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
BOSSY has an A grade for Value and a B for Growth, Stability, and Quality. It is ranked #2 out of the 59 stocks in the Fashion & Luxury industry. Click here to access the additional BOSSY’s ratings for Momentum and Sentiment.
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RACE shares were trading at $500.16 per share on Monday afternoon, down $3.27 (-0.65%). Year-to-date, RACE has gained 17.73%, versus a 2.18% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
