In 2024, the overall apparel market delivered global revenue of $1.8 trillion, a 3.47% increase from the previous year, with the U.S. accounting for 20% of the total market share. While the broader market showed growth, some segments like fast fashion and luxury faced challenges, while consignment and thrift apparel saw increased spending.
Trends such as e-commerce and athletic-inspired attire are reshaping the status quo. While apparel stocks are certainly subject to cyclicality, these businesses do benefit from long-term trends in consumer spending.
Apparel companies with robust omnichannel businesses and/or a unique value proposition to provide to consumers are most likely to succeed through and beyond economic slowdowns.
Clothing is a basic staple, so this isn’t an industry benefiting from prevailing secular trends. The best apparel companies are much more than just clothing manufacturers.
Apparel stocks to watch in 2025
Here are the top apparel stocks to buy in 2025 and beyond:
1. Nike
NYSE: NKE
Key Data Points
Nike needs little introduction. The global footwear and apparel leader has been a major part of sports and pop culture for decades and remains a household name in fashion, athletic gear, and everyday street clothing. While Nike's growth has been resilient through the decades, the last few years have brought challenges for the business.
- Nike is facing struggles due to a combination of factors, including a slowdown in consumer demand, increased competition from other brands, and a shift in consumer preferences away from expensive sneakers and textiles toward experiences and basics.
- Some analysts also believe Nike has become too reliant on selling classic, retro designs like Dunks, Air Jordan 1s, and Air Force 1s while neglecting innovation and new product development.
- The company's rapid shift toward a direct-to-consumer strategy, while initially promising, has led to challenges in managing inventory and adapting to changing consumer behaviors.
- This shift also eroded long-standing relationships with key wholesaling partners.
- Nike's business in China, a key market, has faced headwinds due to economic slowdown and increased competition from local brands.
The company announced the return of Nike veteran Elliott Hill to the company as its new CEO in September 2024, with Hill formally assuming the role in October. His multiyear turnaround plan for Nike centers on returning to the core of the brand's identity: sport and the athlete, with a focus on rebuilding relationships with retailers and driving innovation.
The company wants to reconnect with athletes and sports enthusiasts by emphasizing the brand's authentic connection to sport. Nike plans to revitalize its product lineup with innovation, ensuring that its offerings are not only in line with current trends but also ahead of the curve in terms of performance and design.
Hill acknowledges that Nike has been relying too heavily on promotions to drive sales and plans to shift to a full-price model on its online business while aggressively liquidating old inventory through less profitable channels. While the recovery will be a multiyear effort, investors who believe in the future of this classic sportswear retailer may decide that the company's long-term growth story is a proposition worth waiting on.
2. Skechers
Skechers, one of Nike’s biggest competitors, has recorded strong growth in recent financial results. Skechers is demonstrating the power of its e-commerce capabilities and worldwide distribution channels for its clothing and sneakers.
Skechers has especially succeeded at increasing brand awareness outside of the U.S. This market is where it earns more than 60% of its total revenue.
That's a higher proportion than for many of its peers and has significantly contributed to the company's revenue growth. Producing on-trend styles at value prices has also been a key to Skechers' international success.
Skechers continues to demonstrate the power of its shoe business and top lifestyle brand. For long-term investors, this could be an underappreciated business and a great value play.
3. Lululemon Athletica
NASDAQ: LULU
Key Data Points
Lululemon Athletica began as a pioneer of sorts with women’s yoga attire and significantly helped to popularize athletic-inspired apparel for everyday wear. Building on its early success, the company now has full lines of clothing for women, men, and children.
- Lululemon continues to innovate its product offerings, expanding beyond yoga into categories like running and training and offering footwear.
- Lululemon is aggressively expanding internationally, particularly in China and Europe, and is also targeting significant growth in men's and digital channels.
- In 2024, Lululemon's net revenue increased 10% to $10.6 billion, driven by a 34% increase in international net revenue.
- The company's income from operations also rose 17% year over year to $2.5 billion in 2024.
Lululemon could be an intriguing way for investors to capitalize on the athleisure boom worldwide, as well as the growth of the fitness industry.
4. Stitch Fix
NASDAQ: SFIX
Key Data Points
Stitch Fix has made a name for itself in the online personal styling space. Founded in 2011, this company has quickly grown to be a leader in online retail. It uses machine learning on information collected from customers to help stylists curate personalized clothing and accessory options. Customers keep what they like and send back what they don’t want, giving Stitch Fix’s AI software algorithms more data to make the service even better.
The company has branched out and offers its customers the ability to shop and buy from its clothing collections directly, rather than just receive curated items. The service, called Stitch Fix Freestyle, could expand on the company’s appeal to consumers.
- Over the last few years, Stitch Fix has faced a tough environment.
- Declining revenue, a slowdown in its active client base, and changes in consumer spending have led to a focus on cost-cutting.
- The company is aiming for a turnaround by 2026, but right now it is unprofitable and burning through cash.
Stitch Fix is focusing on improving the customer experience and exploring new avenues for growth. This small apparel and retail technology company could have plenty of opportunities to grow if it can execute its turnaround strategy effectively.
5. The TJX Companies
NYSE: TJX
Key Data Points
In the rapidly evolving digital era, The TJX Companies -- parent company of T.J. Maxx, Marshalls, and HomeGoods -- would seem to be an unlikely winner. The retailer is highly reliant on sales from brick-and-mortar stores, which afford a treasure hunt-style shopping experience, and it has unpredictable inventory because it sources excess goods from manufacturers and retailers.
- TJX operates under a unique off-price retail model, focusing on selling brand-name and designer merchandise at deep discounts.
- TJX sources its merchandise from various channels, including department store cancellations, manufacturer overstocks, and end-of-season closeouts.
- Constantly rotating inventory keeps customers engaged.
- Meanwhile, TJX cultivates strong relationships with vendors, often purchasing incomplete assortments of stock and not requiring return privileges, allowing them to acquire merchandise at attractive prices.
- This enables a streamlined supply chain that ensures stores are well-stocked with in-demand merchandise.
The company's comparable store sales increased 4% in the most recent fiscal year, driven by mid-single-digit growth across all its core divisions. The company also reported net income of $4.9 billion, up about 9% from the prior fiscal year. TJX stock is another long-term value play among apparel stocks, and it pays a decent dividend to boot.
6. Target
NYSE: TGT
Key Data Points
Yes, big-box store Target is an apparel company. In fact, it’s a fast-growing clothier. Consumers regularly rely on the retail chain for everyday items, including clothes. The last few years have brought some challenges for Target, including headwinds from decreases in discretionary consumer spending and inventory shrinkage due to increases in retail theft.
- Target stores are widely accessible, with most of the U.S. population living within a few miles of one.
- Shoppers can find everything they need in just a single trip (or click), and the company's shipping and delivery operations are a further differentiator.
- When the trajectory of consumer spending recovers, Target could be well-positioned to benefit.
- Although comparable sales were essentially flat in fiscal 2024, traffic grew 1.4%, reflecting increases in both stores and digital channels.
- Target is still profitable, too, and the company reported that it has achieved cost savings of more than $2 billion over the last few years.
It has also maintained its commitment to its dividend throughout that time, and is clocking 54 years of consecutive dividend increases at this point, making it part of an elite group of companies known as Dividend Kings.
Related investing topics
Should you add apparel stocks to your portfolio?
The apparel industry isn’t the most exciting one out there. Still, it’s being disrupted like never before by digital commerce trends and a shopping populace that increasingly favors athleisure and athletic-inspired attire.
- The apparel industry encompasses a wide variety of segments, including luxury, activewear, and fast fashion, allowing for diversification within the sector if you’re an investor who wants to put money to work in this space.
- People consistently buy clothes, even in challenging economic times, lending some resilience to apparel companies even during market downturns.
- Driven by evolving fashion trends and increasing global consumer demand, the industry offers growth opportunities for companies that can maintain innovative brands, which can translate to gains for long-term investors.
- The ever-growing popularity of online shopping provides a significant opportunity for apparel companies with a strong digital presence and strategies.
Investors interested in buying apparel stocks should focus on the companies with strong financials and durable opportunities for long-term growth.
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