The luxury market is thriving, fueled by economic recovery and rising consumer spending. Segments like luxury fashion, jewelry, and watches are witnessing steady growth, with the Asia-Pacific region driving demand. This highlights the shift towards Direct-to-Consumer models and trend adaptation.

Hence, as global luxury demand soars, strong performers like Tapestry Inc. (TPR), Ralph Lauren Corporation (RL), and Nordstrom, Inc. (JWN) are worth considering.

Younger consumers are driving luxury brands to embrace sustainability and digitalization, aligning with evolving preferences and boosting relevance. Transparent, responsible practices are increasing premium sales across categories like cosmetics, jewelry, and apparel, which have outperformed. As a result, the global luxury fashion market is projected to reach $410.6 billion by 2032, growing at a CAGR of 5.8%.

Despite certain challenges, the consumer outlook for the second half of 2025 remains positive, driven by increased tourism and expanded retail channels supporting sector recovery. Online sales are emerging as the dominant platform for luxury purchases, with brands focusing on personalized digital experiences. This year, the luxury goods market is projected to generate $473.90 billion, with a 4% CAGR.

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

Stock #3: Tapestry Inc. (TPR)

TPR provides luxury accessories and branded lifestyle products internationally. The company operates in three segments: Coach, Kate Spade, and Stuart Weitzman.

In terms of the trailing-12-month gross profit margin, TPR’s 73.91% is 95.6% higher than the 37.79% industry average. Its 29.92% trailing-12-month Return on Common Equity is 172.7% higher than the 10.97% industry average. Moreover, the stock’s 12.12% trailing-12-month net income margin is 188.2% higher than the 4.20% industry average.

During the first quarter that ended on September 28, 2024, TPR’s net sales came in at $1.51 billion. Its gross profit rose 3.4% year-over-year to $1.13 billion. The company’s net income was reported at $186.60 million, or $0.79 per share. Moreover, as of September 28, 2024, its total assets stood at $13.73 billion, compared to $13.40 billion as of June 29, 2024.

Street expects TPR’s EPS for the quarter ending December 31, 2024, to increase 5.9% year-over-year to $1.73. Its revenue for the same quarter is expected to rise 1.2% year-over-year to $2.11 billion. TPR’s stock has gained 76.1% over the past year to close the last trading session at $65.87.

TPR’s robust prospects are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has an A grade for Quality. It is ranked #26 out of 59 stocks in the Fashion & Luxury industry. Click here to access all of TPR’s POWR Ratings (Growth, Value, Momentum, Stability, and Sentiment).

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 161.8% higher than the 4.50% industry average. Its 12.42% trailing-12-month EBIT margin is 54.5% higher than the 8.04% industry average. Also, the stock’s 10.06% trailing-12-month Return on Total Assets is 155.4% higher than the 3.94% 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 8% and 4% 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 57.6% to close the last trading session at $229.55.

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 an A grade for Quality and a B for Sentiment. It is ranked #12 in the same industry. Beyond what we stated above, we also have given RL grades for Growth, Value, Momentum, and Stability. Get all the RL ratings here.

Stock #1: Nordstrom, Inc. (JWN)

JWN is a fashion retailer that provides apparel, shoes, beauty products, accessories, and home goods for women, men, young adults, and children. It offers a range of brand-name and private-label merchandise through various channels, including Nordstrom-branded stores, online, and clearance stores.

On December 18, 2024, JWN announced plans to open a new Nordstrom Rack in Nashua, New Hampshire, in spring 2025. The 30,000-square-foot store will offer discounted brands and services such as online order pickup and easy returns.

In terms of the trailing-12-month Return on Common Equity, JWN’s 30.54% is 178.3% higher than the 10.97% industry average. Its 6.71% trailing-12-month Return on Total Capital is 8.6% higher than the 6.18% industry average. Likewise, the stock’s 1.65x trailing-12-month asset turnover ratio is 68.2% higher than the 0.98x industry average.

During the third quarter, which ended on November 2, 2024, JWN’s revenue increased 4.6% year-over-year to $3.35 billion. The company’s adjusted EBITDA was $231 million, up 12.7% from the prior year’s quarter. Additionally, its adjusted EPS rose 32% from the year-ago value to $0.33.

Analysts expect JWN’s revenue for the quarter ending April 30, 2025, to increase 2.2% year-over-year to $3.41 billion. Its EPS for fiscal 2026 is expected to grow 4.2% year-over-year to $2.04. It surpassed the Street EPS estimates in three of the trailing four quarters. Over the past year, JWN’s stock has gained 28% to close the last trading session at $24.21.

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

It has an A grade for Value and a B for Momentum and Quality. Within the Fashion & Luxury industry, it is ranked #5. To see JWN’s Growth, Stability, and Sentiment ratings, click here.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

TPR shares were trading at $65.71 per share on Monday morning, down $0.16 (-0.24%). Year-to-date, TPR has gained 83.87%, versus a 25.21% 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...

More Resources for the Stocks in this Article