Fashion can be fun, but make no mistake it can pay off too. The global clothing market is emerging from a historic decline caused by lockdowns, social distancing and economic downturns due to the COVID-19 outbreak and measures to contain it. COVID still persists, but the clothing market appears ripe for a rebound and poised to reach new heights. During the lockdown, consumers moved away from buying new clothes. However, clothing companies still have the potential to generate good profits and significant capital gains. Not only is the industry huge, it is also ripe for a rebound with much higher seasonal demand during the holidays. It’s time to ditch the sweatpants, dress for success, and take some clothes seriously.
Some of the biggest and most popular clothing brands are owned and operated by unknown names like PVH Corp. (NYSE: PVH) which has several brands under its umbrella, including Van Heusen, Tommy Hilfiger and Calvin Klein, among others. Formerly known as the Phillips-Van Heusen Corporation, PVH also licenses brands such as Kenneth Cole New York and Michael Kors. PVH is one of the largest global clothing companies in the world, with sales of $ 7.1 billion in 2020. PVH has released results for the third quarter of fiscal 2021, where the bottom line exceeded Zacks’ consensus estimate, while the top row missed the same. However, both measures improved year over year. The Calvin Klein segment improved 22% year-over-year and the Tommy Hilfiger segment grew 12%. A leading hedge fund, Pzena Investment Management, had invested $ 439 million in the stock at the end of September and, according to a solid indicator, an insider bought 1,981 shares at $ 81 in September 2020. The company also noted in The third quarter report that holiday season sales are off to a good start and management has raised the outlook for fiscal 2021.
Another name that is not quickly recognized as a clothing giant is VF Corporation (NYSE: VFC). Their brands include Dickies, JanSport, Kipling, The North Face, Timberland, Vans and Supreme. The company controls 55% of the US backpack market across all of its brands, making it a major player in the apparel industry. Across all of their segments, VF Corporation generated nearly $ 10.5 billion in global revenue in 2020, and the company ranked # 1 based on the revenue of the world’s leading clothing companies in 2019. The company announced improved results for the second quarter of fiscal 2022 last October. Overall revenue from continuing operations increased by 23%. Outdoor segment revenue increased 31%, Work segment revenue increased 18%, International revenue increased 18%, and Direct-to-Consumer revenue increased 32%. Fiscal 2022 revenue is now expected to be around $ 12.0 billion, reflecting growth of around 30%.
An intriguing garment name, Digital Brands Group, Inc. (NASDAQ: DBGI) (www.digitalbrandsgroup.co) is redefining retail and customer experience with its first digital group of lifestyle brands. The company currently offers contemporary womenswear through Bailey 44 (www.bailey44.com), high-end denims and luxury essentials through DSTLD (www.dstld.com), and luxury menswear through ACE Studios ( www.acesuits.com).
Digital Brands Group’s unique business model takes advantage of increased global digitization and the long-standing fragmentation of the apparel and fashion markets. The company operates its brands in a decentralized fashion with separate management teams managing each brand while consolidating marketing and technology contracts and cross-marketing to each brand’s customers.
Since going public last May, the company has quickly gained ground and increased its influence by multiplying brands and building scale. Digital Brands released impressive third quarter 2021 results last November – third quarter 2021 net sales increased 75% year-on-year and gross profit margin increased 96% year-on-year to 55 , 9%.
DBGI also provided a stunning net revenue forecast for fiscal 2022, an increase of 350% over 2021 with revenue forecast of $ 37.5- $ 42.5 million for 2022. The company expects EBITDA positive for 2022 by leveraging its shared services platform. Commenting on the strong growth, Hil Davis, CEO of Digital Brands Group, said that this expected 350% increase in our year over revenue growth does not reflect any potential additional acquisitions, nor any significant benefit from our expected increase. marketing expenses. . Digital Brands expects continued growth through acquisitions and to continue acquiring companies this year and next.
Although much smaller than other clothing brands, DBGI may well have the highest potential. The stock is trading at the low end of its range and with such a high growth potential if the company hits or breaks expectations, the top of its range could be in the rearview mirror. The holidays and the seasonal clothing wave are fast approaching. It seems like the perfect time to celebrate, have fun, and position portfolios with clothing stocks.
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