What happened

Levi Strauss (LEVI -0.23%), Capri Holdings (CPRI -0.90%), and Crocs (CROX 1.68%) stocks all beat the market this week as shares rose over 12% through Thursday trading compared to a 5% surge in the broader market, according to data provided by S&P Global Market Intelligence.

The spikes weren't enough to put any of the stocks back in positive territory, though, and they all are still trailing the market so far in 2022. The apparel and footwear specialists bounced back from losses in previous weeks as Wall Street started to look past manufacturing and demand challenges in China.

A person shopping for apparel.

Image source: Getty Images.

So what

Each of these companies, to varying degrees, is exposed to the Chinese market, both for sales growth and as an important manufacturing hub. That's why the stocks jumped on signs that the latest COVID-19 outbreak there might not cause widespread supply chain disruptions or lead to significantly depressed shopper traffic, as investors had feared.

A milder outbreak would be good news for Crocs' business, which operates 153 stores in the Asia Pacific region, or nearly as many as it has in the U.S. market. Capri counts China as a major growth market, too, and Levi Strauss' management team said in late January that the country is a pillar of its long-term international expansion strategy. Some of the share price declines investors have seen in recent weeks likely came from concerns about slowing growth here, and this week's optimism eased that negative trend.

Now what

China's importance as both a manufacturing hub and a key growth avenue means these stocks are likely to continue reacting to developments that show changing economic trends there. The good news is that we're about to get a major industry update that answers many of investors' main questions in just a few days.

Global footwear giant Nike will shed light on the China situation when it announces its latest operating results on Monday, March 21. The company said during its last report that weak results out of the country were the main reason why overall growth was flat in the fiscal second quarter. Nike said back in late December that a rebound there was likely in the second half of 2022, but changing conditions might have shifted that outlook.

As a result, look for Levi, Capri, and Crocs stocks to see another volatile trading week ahead as news developments on China's pandemic restrictions and supply chain challenges, along with updates from Nike on the health of the global market for premium footwear and apparel, impact Wall Street's mood.

Yet these short-term swings are ultimately a distraction from the real engines of positive shareholder returns, which include steady market share growth and rising profitability. Follow these metrics for signs that Capri, Levi Strauss, and Crocs stocks are on the right path, regardless of whether they must endure temporary slumps in certain regions of the world.