While the fashion industry experienced diminished sales and profits last year due to the COVID-19 pandemic, the industry is forging ahead with new trends and ideas this year. Its efforts to strengthen digital platforms have contributed mightily to the industry’s revival this year. Also, rising consumer spending with the improving job market and pent-up demand are key driving forces behind the fashion market’s growth. According to a Statista report, the fashion segment’s revenue is projected to reach $898.67 billion in 2021.

Fashion companies’ reshaped business models, streamlined operations, and sharpened customer propositions are powering the industry’s growth. Furthermore, with the steady rise in vaccination rates and the upcoming holiday season, the sector is projected to witness a significant boost in brick-and-mortar store sales.

Given this backdrop, if one has $4,000 in disposable cash, we think betting it on Signet Jewelers Limited (SIG), Oxford Industries, Inc. (OXM), Caleres, Inc. (CAL), and Movado Group, Inc. (MOV) could be rewarding. These fashion stocks are expected to deliver significant returns in the near term based on their strong positions in the market and diverse portfolios.

Signet Jewelers Limited (SIG)

Based in Hamilton, Bermuda, SIG is a retailer of diamond jewelry and other diamond products. The company operates through three segments: North America; International; and Other. It runs approximately 2,800 stores, primarily under the Kay Jewelers, Zales, Jared, H.Samuel, Ernest Jones, Peoples, Piercing Pagoda, Rocksbox, and JamesAllen.com banners. In addition, SIG’s segments offer the conversion of rough diamonds to polished stones.

This month, SIG agreed to acquire Diamonds Direct USA Inc, an off-mall, destination jeweler in the U.S. Diamonds Direct’s distinct bridal-focused shopping experience should add a new entry point to SIG. Also, this acquisition should help SIG reach its $9 billion revenue goal over time and drive up its shareholder value.

SIG’s sales for its fiscal second quarter, ended July 31, 2021, increased 101.4% year-over-year to $1.79 billion. The company’s operating income came in at $223 million, versus a $41.7 million operating loss.in the prior-year quarter. Its EPS amounted to $3.57, compared to a $1.13 loss per share in its fiscal second quarter of 2020. Also, the company’s gross margin increased 220.2% year-over-year to $717.6 million.

SIG’s $7.14 billion consensus revenue estimate for its fiscal period ending 2022 represents a 36.6% increase year-over-year. The company has surpassed the consensus EPS in each of the trailing four quarters. In addition, its EPS is expected to increase 382% in the current year. Moreover, the stock has gained 148.1% in price over the past nine months and 266.3% over the past year.

SIG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

Also, the stock has an A grade for Growth, Momentum, and Quality. We’ve graded SIG for Stability, Sentiment, and Value also. Click here to access all of SIG’s ratings. SIG is ranked #3 of 63 stocks in the A-rated Fashion & Luxury industry.

Oxford Industries, Inc. (OXM)

OXM is an apparel company that designs, sources, markets, and distributes lifestyle and other brands worldwide. The Atlanta, Ga., company offers men’s, women’s, and kids’ apparel, sportswear, and related products and accessories under the Tommy Bahama, Lilly Pulitzer, and Southern Tide lifestyle brands among other brands. Its distribution channel consists of approximately 187 brand-specific retail stores, e-commerce websites, 20 Tommy Bahama food and beverage locations, and 35 Tommy Bahama outlet stores.

During its fiscal second quarter, ended July 31, 2021, OXM’s net sales increased 71.2% year-over-year to $328.67 million. The company’s gross profit grew 100.1% from its year-ago value to $209.63 million. Its operating income came in at $67.99 million for the quarter, versus a $8.02 million operating loss in the prior-year quarter. Also, the company’s net earnings amounted to $51.46 million, compared to a $6.09 million net loss in the year-ago quarter.

OXM’s revenue is expected to increase 47.8% year-over-year to $1.11 billion in its fiscal year 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Its EPS is expected to increase by 470.7% in the current year. Over the past nine months, the stock has soared 28.9% in price, and has returned 102.8% over the past year.

OXM’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Quality and Growth, and a B grade for Value.

In addition to the POWR Rating grades I’ve just highlighted, one can see OXM’s ratings for Stability, Sentiment, and Momentum here. OXM is ranked #7 in the Fashion & Luxury  industry.

Caleres, Inc. (CAL)

CAL in St. Louis, Mo., is a global footwear company that operates through Famous Footwear and Brand Portfolio segments. The company offers licensed, branded, and private-label athletic, casual, and dress footwear products to women, men, and children. Its brands are spread across the global marketplace, including 1,200-plus branded retail locations, department and specialty stores, branded e-commerce sites, and many third-party retail sites. 

CAL’s net sales increased 34.7% year-over-year to $675.53 million for its second quarter, ended July 31, 2021. The company’s gross profit grew 76.5% from its year-ago value to $322.29 million. Its operating earnings were $62.79 million, versus a $24.14 million operating loss in the second quarter of 2020. Also, its net earnings amounted to $38.15 million, compared to a $30.67 million net loss in the prior-year quarter.

For its fiscal year 2022, analysts expect CAL’s revenue to increase 28.5% year-over-year to $2.72 billion. It has surpassed the consensus EPS estimates in each of the trailing four quarters. The company’s EPS is estimated to increase 342.9% in the current year. The stock has gained 39.3% in price over the past nine months and 145.8% over the past year.

It’s no surprise that CAL has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Momentum and Growth.

Click here to see the additional POWR Ratings for CAL (Quality, Stability, Value, and Sentiment). In the Fashion & Luxury  industry, CAL is ranked #6.

Movado Group, Inc. (MOV)

MOV designs, sources, markets, and distributes watches globally. The Paramus, N.J.-based company operates in two segments: Watch and Accessory Brands; and Company Stores. It offers its products under the brand names Movado, EBEL, Concord, Oliva Burton, MVMT, Coach Watches, HUGO BOSS Watches, Lacoste Watches, Tommy Hilfiger Watches, and Scuderia Ferrari Watches.

This month, MOV launched its next Artist Series with a renowned 106-year-old Cuban-American artist, Carmen Herrera. The Carmen Herrera X MOVADO Artist Series includes five distinct styles inspired by some of Herrera’s key works and recreated through the prism of Movado’s famous Museum Dial.

For its second fiscal quarter, ended July 31, 2021, MOV’s net sales increased 96.4% year-over-year to $173.87 million. The company’s gross profit grew 117.1% from its year-ago value to $98.45 million. Its operating income came in at $24.63 million, compared to a $8.92 million operating loss in the second quarter of 2020. Also, the company’s net income amounted to $19.41 million for the quarter, compared to a $6.62 million net loss in the prior-year quarter.

Analysts expect MOV’s revenue to increase 41.4% year-over-year to $716.2 million for its fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS in each of the trailing four quarters. Its EPS is estimated to increase 220.7% in the current year. Moreover, the stock has gained 72.8% in price over the past nine months and 178% over the past year.

MOV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Quality and Value, and a B for Growth.

We’ve also graded MOV for Momentum, Stability, and Sentiment. Click here to access all MOV’s ratings. In the same industry, MOV is ranked #1.

SIG shares were trading at $89.82 per share on Tuesday morning, down $1.49 (-1.63%). Year-to-date, SIG has gained 230.29%, versus a 23.57% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...

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