Despite near-term challenges in consumer sentiment, the retail sector continues to exhibit strong long-term growth potential. Factors like rising disposable incomes, digital transformation, and strategic investments in technology are fueling demand and reshaping how retailers operate. More importantly, the sector’s ability to quickly adapt to evolving consumer preferences, coupled with steady demographic expansion, suggests a promising trajectory in the coming years.

Given this backdrop, it could be wise to watch high-growth retail stocks, such as Ralph Lauren Corporation (RL - Get Rating), Sprouts Farmers Market, Inc. (SFM - Get Rating), and Carrefour SA (CRRFY - Get Rating). Whether through premium brand positioning, expansion in the grocery segment, or strategic investments in digital transformation, these companies are leveraging market shifts to drive sustainable growth.

While overall retail sales declined in January, grocery sales remained stable, edging up 0.2% from the previous month and 3.9% year-over-year. This resilience, particularly in essential categories, reflects steady consumer demand amid broader economic fluctuations. Moreover, the food and grocery retail market is set to grow from $12.30 trillion in 2024 to $12.78 trillion in 2025, while the online grocery segment is expected to surge at a 24.8% CAGR through 2033, reinforcing the sector’s digital shift.

Furthermore, with the broader retail market projected to expand at a 7.7% CAGR, reaching nearly $59 billion by 2032, companies that embrace innovation and consumer-centric strategies are well-positioned for growth.

Considering these conducive trends, let’s examine the fundamentals of the three retail picks mentioned above.

Ralph Lauren Corporation (RL - Get Rating)

RL is a global leader in lifestyle products, offering apparel, footwear, accessories, home furnishings, and fragrances under iconic labels like Polo Ralph Lauren and Lauren Ralph Lauren. It caters to consumers worldwide through retail stores, digital platforms, and luxury dining experiences.

On January 10, demonstrating its commitment to returning value to shareholders, the company paid a quarterly dividend of $0.83 per share. RL pays an annual dividend of $3.30, which translates to a dividend yield of 1.20% at the prevailing price levels. Its four-year average dividend yield is 1.88%. Moreover, its dividend payouts have increased at a CAGR of 16.1% over the past three years.

In terms of the trailing-12-month gross profit margin, RL’s 68.08% is 81.4% higher than the 37.52% industry average. Similarly, its 11.87% trailing-12-month levered FCF margin is 149.4% higher than the industry average of 4.76%. Also, its trailing-12-month ROCE of 27.57% compares to the industry average of 11.48%.

For the fiscal third quarter, which ended on December 28, 2024, RL’s net revenues increased by 10.8% year-over-year to $2.14 billion. Its operating income grew 22.7% from the year-ago value to $389.70 million. In addition, the company’s adjusted net income stood at $307.90 million and $4.82 per share, up 11.9% and 15.6% year-over-year, respectively.

Street expects RL’s revenue for the fiscal fourth quarter (ending March 2025) to increase 4.8% year-over-year to $1.64 billion. Its EPS for the same period is expected to grow 18.5% year-over-year to $2.03. In addition, it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is promising.

Over the past six months, the stock has gained 58.2%, closing the last trading session at $270.73. 

RL’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

RL has an A grade for Quality and a B for Growth. It is ranked #14 out of 72 stocks in the B-rated Fashion & Luxury industry.

Beyond what we have stated above, we also have given RL grades for Value, Momentum, Stability, and Sentiment. Get all the RL’s ratings here.

Sprouts Farmers Market, Inc. (SFM - Get Rating)

SFM is a specialty retailer of fresh, natural, and organic food products. It sells various products categorized under perishable and non-perishable categories, such as fresh produce, vitamins and supplements, grocery, meat and seafood, bakery, dairy, body care, and natural household items.

In terms of the trailing-12-month net income margin, SFM’s 4.93% is 11.2% higher than the 4.43% industry average. In addition, its trailing-12-month ROCE and ROTA of 30.81% and 10.45% compare favorably to their respective industry averages of 10.44% and 4.05%.

In the fourth quarter ended December 29, 2024, SFM’s net sales increased 17.5% year-over-year to $1.99 billion. Its gross profit came in at $759.89 million, up 22.5% year-over-year. The company’s income from operations grew 53.3% from the year-ago value to $106.46 million, while its net income increased 59% year-over-year to $79.60 million. Also, its net income per share stood at $0.79, representing an increase of 61.2% year-over-year.

The consensus EPS estimate of $1.55 for the first quarter (ending March 2025) represents a 38.5% improvement year-over-year. The consensus revenue estimate of $2.20 billion for the current quarter indicates a 16.8% increase from the same period last year. The company has an excellent earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters.

Shares of SFM have surged 136.8% over the past year and 12.4% year-to-date to close the last trading session at $142.87.

SFM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

It has an A grade for Quality and a B for Growth. Among 35 stocks in the A-rated Grocery/Big Box Retailers industry, it is ranked #21.

In addition to the POWR Rating grades I’ve just highlighted, you can see the SFM ratings for Value, Momentum, Stability, and Sentiment here.

Carrefour SA (CRRFY - Get Rating)

CRRFY is a France-based retail distribution group that operates hypermarkets, supermarkets, convenience stores, cash and carry stores; e-commerce sites; and service stations. Its stores offer a wide range of local fresh produce; local products; and non-food products, including electronic and household appliances, textiles, childcare, and seasonal products.

On February 11, CRRFY announced plans to acquire the remaining shares of its Brazilian subsidiary, Grupo Carrefour Brasil, and delist it from the São Paulo Stock Exchange (B3) through a share merger. Already holding a 67.4% stake, the company aims for full ownership to streamline operations and accelerate growth. Carrefour sees Brazil as a key market and believes this move will enhance agility, drive operational excellence, and create long-term value.

In terms of trailing-12-month, the stock’s asset turnover ratio of 1.54x is 77.2% higher than the industry average of 0.87x.

CRRFY’s total revenue increased 2.8% year-over-year to €87.27 billion ($91.16 billion) in the fiscal year that ended December 31, 2024. Its gross margin rose 2% from the year-ago value to €16.97 billion ($17.72 billion), while its recurring operating income before D&A (EBITDA) stood at€4.64 billion ($4.84 billion), up 1.7% year-over-year. Also, its net income, group share, adjusted for exceptional items, amounted to €1.08 billion ($1.13 billion) or €1.61 per share.

Analysts expect CRRFY’s revenue and EPS for the fiscal year ending December 2025 to increase 3.3% and 7.9% year-over-year to $92 billion and $0.36, respectively. However, the stock has lost 6.8% over the past month to close the last trading session at $2.61.

It’s no surprise that CRRFY has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Growth and Value and a B for Stability.

In the 35-stock Grocery/Big Box Retailers industry, it is ranked #7. To see additional POWR Ratings for CRRFY for Momentum, Sentiment, and Quality, click here.

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RL shares . Year-to-date, RL has gained 17.21%, versus a -0.18% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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