January can probably be described as the calm that follows the storm as the Christmas shopping frenzy abates. The first week of sales can still see a spike as consumers return gifts and buy something they really want, but by and large the tide is shifting to a comparatively quieter season for consumer discretionary stocks.

That gives investors the opportunity to take stock of how retailers fared and the challenges they still face. The three retailers below are companies that investors will want to keep an eye on.

Clothes rack with sales tags

Image source: Getty Images.

Got the blues

Although department stores aren't the mecca for shoppers they once were, Levi Strauss (NYSE:LEVI) is finding that not all retail is created equal, as premium outlets are faring better than mid-tier stores. And denim is enjoying momentum as casual wear remains a strong component of apparel.

But management is also looking to increase the percentage of sales that are sold direct-to-consumer, which drove revenue high by double digit rates last quarter. CEO Chip Bergh told investors last quarter, "Growing our U.S. direct-to-consumer business allows us to move toward premiumizing the marketplace, and remains one of our important strategies to offset headwinds in U.S. wholesale."

A component of that is increasing its own store footprint by committing to opening 100 new stores this year. Along with riding the coattails of another resurgent retailer this year, Target (NYSE:TGT), by introducing its Red Tab jeans into the mass merchandiser's online store and physical stores, Levi Strauss thinks it can bring even more customers in.

The stock still trades below its March IPO price, but coupled with a generous dividend that currently yields 3%, investors will be seeing green if this story plays out right.

Stretching out more gains

Few retailers have had a better year than Lululemon Athletica (NASDAQ:LULU), which is up 88% in 2019. It has ridden the wave of demand for activewear. Third-quarter earnings once again surpassed analyst expectations, although its guidance for the fourth was at the low end of forecasts.

The athleisure leader has used its domestic market dominance as a springboard for international sales growth and broadening its product lines. This has many analysts seeing a multi-year opportunity for its stock.

Yet Lululemon is also being valued at a premium by the market, with shares priced at over 40 times next year's earnings estimates and nearly eight times sales, so this isn't a suggestion the stock is a buy. But it is the top name in its space, and should the stock pull back for any speed bumps in trade negotiations or some other macro event, it would be worthwhile to be ready to buy in.

Coming under fire

Under Armour (NYSE:UA)(NYSE:UAA) has suffered from declining sales over the last two years. Though it reported better-than-expected third-quarter earnings last month, it was hit by declining North American sales, a cut in its full-year outlook, changes to its management, and allegations it engaged in financial shenanigans to make its sales look better than they were.

Company founder Kevin Plank will be stepping down from the CEO role on Jan. 1, and though he will remain Under Armour's executive chairman and brand chief, the apparel company is embarking on a new era under COO Patrik Frisk, who will assume the top spot. 

Under Armour maintains its accounting has been above board, and it has been cooperating with the investigations, but the Justice Department's involvement in the probes over revenue recognition underscores the seriousness of the allegations and the potential for criminal liability.

Even if Under Armour's finances are sound, it is still losing market share to rivals Nike and Adidas, and the ongoing decline in traffic at its North American outlet and brand stores is worrisome. But new, increased marketing in the new year with a new CEO could help the sports apparel company stage a dramatic comeback.