Sports and fitness apparel are experiencing strong demand, driven by rapidly surging demand, innovations, and changing consumer behaviors. This is opening broad opportunities and prospects for the sports apparel industry.
Given the industry’s tailwinds, it could be wise to watch quality sports apparel stocks NIKE, Inc. (NKE), Lululemon Athletica Inc. (LULU), and Under Armour, Inc. (UAA).
More and more people have started prioritizing their health and fitness owing to rising health concerns coupled with high workloads and stressful lifestyles, resulting in surging demand for sportswear and activewear in the market. Sports apparel companies are actively designing comfortable and trend-oriented products to keep up with the market dynamics.
From sportswear and activewear to footwear and fitness bands, all are evidencing strong demand. Not only this, but recent eco-friendly and sustainable practices are presenting new opportunities for companies operating in the sports apparel segment, expanding the market's potential.
With this, the global sports apparel market is expected to grow by $106.50 by 2029 billion at a CAGR of 8.1%, driven by demand for innovative and premium sports apparel and technological advancements in fabric technology and design, contributing to market growth.
Also, an increasing population of health- and fitness-conscious people, along with rising awareness of the environment and sustainability, is shaping the trajectory of the global activewear market. Companies are leaning toward recycled materials, reducing waste, and improving their operations, attracting more customers.
Given the industry’s robust outlook, watching fundamentally strong sports apparel stocks NKE, LULU, and UAA could be wise.
Let’s discuss the fundamentals of these stocks in detail:
NIKE, Inc. (NKE)
NKE globally designs, develops, markets, and sells athletic footwear, apparel, equipment, accessories, and services. Its athletic and casual footwear, apparel, and accessories are marketed under the NIKE, Jumpman, Converse, Chuck Taylor, All-Star, One Star, Star Chevron, and Jack Purcell trademarks.
NKE’s trailing-12-month gross profit margin and EBIT margin of 44.73% and 12.08% are 18.7% and 50.3% higher than the respective industry averages of 37.68% and 8.04%. Further, the stock’s trailing-12-month net income margin of 9.98% is considerably higher than the industry average of 4.21%.
For the second quarter that ended November 30, 2024, NKE posted revenues of $12.35 billion. The company’s gross profit totaled $5.39 billion for the period. Also, the company reported a net income of $1.16 billion for the quarter, while its EPS came in at $0.78, respectively.
Street expects NKE’s revenue for the fiscal year (ending May 2026) to increase 2.1% year-over-year to $46.99 billion. The company’s EPS for the same year is expected to grow 17.3% year-over-year to $2.42. Moreover, the company topped the consensus EPS estimates in all of the trailing four quarters.
Shares of NKE have gained 1.3% over the past month to close the last trading session at $72.26.
NKE’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.
NKE has a B grade for Quality. It is ranked #13 out of 33 stocks in the Athletics & Recreation industry.
In addition to the POWR Ratings we’ve stated above, we also have NKE ratings for Stability, Sentiment, Value, Momentum, and Growth. Get all NKE ratings here.
Lululemon Athletica Inc. (LULU)
Headquartered in Vancouver, Canada, LULU designs, distributes, and retails athletic apparel, footwear, and accessories under the lululemon brand for women and men. The company offers pants, shorts, tops, and jackets for a healthy lifestyle and also provides fitness-inspired accessories.
LULU’s trailing-12-month gross profit margin of 58.85% is 56.2% higher than the industry average of 37.68%. Likewise, the stock’s trailing-12-month EBIT margin of 23.37% is 190.7% higher than the 8.04% industry average. Likewise, the stock’s trailing-12-month net income margin of 17.05% is significantly higher than the 4.21% industry average.
On January 13, 2025, LULU announced its updated revenue and earnings expectations for the fourth quarter of 2024. The company now expects net revenue in the range of $3.56 billion to $3.58 billion, reflecting 11% - 12% growth year-over-year. It also expects EPS between $5.81 and $5.85, compared to the previous guidance range of $5.56 to $5.64.
During the third quarter that ended on October 27, 2024, LULU’s net revenue increased 8.7% year-over-year to $2.40 billion. The company’s gross profit rose 11.5% from the year-ago value to $1.40 billion. Its income from operations of $490.66 million reflects a growth of 45.1% from the prior year’s quarter.
Furthermore, the company’s net income and EPS amounted to $351.87 million and $2.87, up 41.5% and 46.4% over the previous year’s period, respectively.
Street expects LULU’s EPS for the fourth quarter ended January 2025 to increase 10.8% year-over-year to $5.86. The company’s revenue is expected to increase 11.9% year-over-year to $3.59 billion for the same quarter. Also, the company surpassed consensus EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 64.9% and 3.3% year-to-date to close the last trading session at $395.16.
LULU’s promising outlook is reflected in its POWR Ratings. The stock has an A grade for Quality and a B grade for Sentiment. Within the B-rated Fashion & Luxury industry, LULU is ranked #33 of 59 stocks.
Click here to access additional ratings of LULU for Momentum, Growth, Value, and Stability.
Under Armour, Inc. (UAA)
UAA is engaged in developing, marketing, and distributing performance apparel, footwear, and accessories for men, women, and youth. It offers its apparel products in compression, fitted, and loose fit types. The company’s products are primarily offered under the UNDER ARMOUR, ARMOUR, HEATGEAR, COLDGEAR, HOVR, UA, PROTECT THIS HOUSE, and I WILL brands.
UAA’s trailing-12-month gross profit margin of 47.47% is 26% higher than the industry average of 37.68%. Further, the stock’s trailing-12-month levered FCF margin of 4.87% is 6.1% higher than the industry average of 4.59%. Also, its trailing-12-month CAPEX/Sales of 3.27% is considerably higher than the 2.85% industry average.
During the third quarter that ended December 31, 2024, UAA reported net revenues of $1.40 billion, and its gross profit came in at $665.15 million for the same quarter. Also, the company’s adjusted net income amounted to $35 million or $0.08 per share for the period, respectively.
In addition, UAA’s cash and cash equivalents and total assets were $726.88 million and $4.63 billion as of December 31, 2024.
For the fiscal year 2025, the company expects its adjusted income from operations to be $185 million - $195 million. Its adjusted EPS is projected between $0.28 and $0.30.
Analysts expect UAA’s revenue and EPS for the fiscal year (ending March 2026) to increase marginally and 31.4% year-over-year to $5.16 billion and $0.40, respectively. Moreover, the company has surpassed Street revenue and EPS estimates in each of the trailing quarters, which is impressive.
UAA’s stock has surged 6.4% over the past nine months to close the last trading session at $7.14.
UAA’s POWR Ratings reflect robust prospects. The stock is ranked #24 out of 33 stocks in the Athletics & Recreation industry.
Click here to access all ratings of UAA.
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NKE shares were trading at $73.46 per share on Thursday afternoon, up $1.20 (+1.66%). Year-to-date, NKE has declined -2.92%, versus a 3.95% 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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