Despite slowing demand in mature markets and geopolitical tensions, high-income consumers continue prioritizing luxury spending amid economic uncertainties. Emerging markets, particularly in Asia, are driving strong growth due to rising demand.

With global luxury demand soaring, it may be prudent to watch fundamentally strong stocks like Steven Madden, Ltd. (SHOO), Ralph Lauren Corporation (RL), and Hugo Boss AG (BOSSY).

As Gen Z and Millennials drive increasing interest in luxury, digital engagement and exclusive collections attract both new and loyal customers. E-commerce and omnichannel strategies enhance accessibility and customer experience, fueling luxury sales growth. This year, the luxury goods market is expected to generate $473.90 billion in revenue, with a projected CAGR of 4%.

Similarly, with strong growth in high-demand categories like cosmetics, jewelry, and apparel, the global luxury fashion market is projected to reach $410.6 billion by 2032, growing at a CAGR of 5.8% from 2024 to 2032. Notably, increased tourism and expanded retail channels are driving sector recovery.

Considering these conducive trends, let’s analyze the fundamental aspects of the three Fashion & Luxury industry stocks, beginning with the third choice.

Stock #3: Steven Madden, Ltd. (SHOO)

SHOO designs, sources, and markets fashion-forward branded and private-label footwear, accessories, and apparel in the United States and internationally. It operates through the Wholesale Footwear, Wholesale Accessories/Apparel, Direct-to-Consumer, and Licensing segments.

In terms of the trailing-12-month gross profit margin, SHOO’s 41.27% is 9.5% higher than the 37.69% industry average. Its 20.40% trailing-12-month Return on Common Equity is 91.5% higher than the 10.66% industry average. On the other hand, the stock’s 1% trailing-12-month Capex / Sales is 65.5% lower than the 2.90% industry average.

SHOO’s net sales for the third quarter ended September 30, 2024, increased 13% year-over-year to $621.17 million. Its adjusted gross profit grew 11.6% year-over-year to $259.60 million. Additionally, the company’s adjusted net income attributable to SHOO decreased slightly year-over-year to $64.81 million, while adjusted net income per share rose 3.4% to $0.91 compared to the prior-year quarter.

Street expects SHOO’s revenue for the quarter ending December 31, 2024, to increase 6.5% year-over-year to $553.65 million, while its EPS for the same quarter is expected to decline 10.8% year-over-year to $0.54. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 12.8% to close the last trading session at $41.59.

SHOO’s mixed prospects are reflected in its POWR Ratings. It has an overall rating of C, equating to a Neutral in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a C grade for Growth, Value, Momentum, Stability, Sentiment, and Quality. It is ranked #20 out of 61 stocks in the B-rated Fashion & Luxury industry. Click here to access all of SHOO’s POWR Ratings.

Stock #2: Ralph Lauren Corporation (RL)

RL designs, markets, and distributes lifestyle products in North America, Europe, Asia, and other international markets. The company offers apparel, including a range of men’s, women’s, and children’s clothing, as well as footwear, accessories, leather goods, home products, and fragrances.

In terms of the trailing-12-month levered FCF margin, RL’s 11.78% is 149.3% higher than the 4.72% industry average. Its 12.42% trailing-12-month EBIT margin is 53.9% higher than the 8.07% industry average. Also, the stock’s 10.06% trailing-12-month Return on Total Assets is 159.1% higher than the 3.88% industry average.

For the fiscal second quarter that ended September 28, 2024, RL’s revenues increased 5.7% year-over-year to $1.73 billion. Its gross profit rose 8% from the year-ago value to $1.16 billion. In addition, the company’s non-GAAP net income and non-GAAP net income per common share grew 15% and 21% from the prior year’s period to $162.10 million and $2.54, respectively.

For the quarter ending December 31, 2024, RL’s EPS and revenue are expected to increase 7.9% and 3.9% year-over-year to $4.50 and $2.01 billion, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 64.9% to close the last trading session at $202.15.

It’s no surprise that RL has an overall rating of B, which translates to a Buy in our proprietary POWR Ratings system.

It has a B grade for Quality and a B for Sentiment. It is ranked #17 in the same industry. Beyond what we stated above, we also have given RL grades for Growth, Momentum, Stability, and Sentiment. Get all the RL ratings here.

Stock #1: Hugo Boss AG (BOSSY)

Headquartered in Metzingen, Germany, BOSSY and its subsidiaries provide apparel, shoes, and accessories for men and women worldwide. It also offers licensed products, including fragrances, eyewear, watches, children’s fashion, equestrian items, and cycling gear.

On November 13, 2024, BOSSY launched its Ski capsule collection, featuring high-performance skiwear and luxurious après-ski pieces in signature colors. The collection combines technical functionality with modern sophistication, available at selected BOSSY stores and online.

On October 23, 2024, BOSSY announced its collaboration with Laurastar to launch the “Laurastar by BOSS” high-end steamers, blending cutting-edge technology and minimalist design for premium garment care. The collection includes the versatile IZZI steamer and portable IGGI steamer, available globally online.

In terms of the trailing-12-month Return on Common Equity, BOSSY’s 16.93% is 58.8% higher than the 10.66% industry average. Its 61.49% trailing-12-month gross profit margin is 63.2% higher than the 37.7% industry average. Likewise, the stock’s 1.23x trailing-12-month asset turnover ratio is 22.5% higher than the 1x industry average.

During the third quarter ended September 30, 2024, BOSSY’s net sales increased marginally year-over-year to €1.03 billion ($1.09 billion). Its gross profit amounted to €619 million ($653.65 million). For the same period, its net income and EPS stood at €56 million ($59.13 million) and €0.79, respectively.

Analysts expect BOSSY’s revenue for fiscal 2025 to increase 4.1% year-over-year to $4.68 billion. It surpassed the Street revenue estimates in three of the trailing four quarters. Over the past three months, BOSSY’s stock has gained 1.9% to close the last trading session at $8.93.

BOSSY’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

It has an A grade for Value and a B for Growth, Stability, and Quality. Within the Fashion & Luxury industry, it is ranked first. To see BOSSY’s Momentum and Sentiment ratings, click here.

What To Do Next?

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RL shares rose $3.37 (+1.67%) in premarket trading Thursday. Year-to-date, RL has gained 44.39%, versus a 25.98% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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