The global fashion industry is finding its feet again after nearly two years of supply-chain disruption and patchy demand. McKinsey Fashion Scenarios suggest global fashion sales will reach 103-108% of 2019 levels in 2022. Due to pent-up demand, sales seem to be on track to pick up momentum this year.
Given the dynamicity of the apparel industry, the integration of technological innovations such as Artificial Intelligence (AI), Augmented Reality (AR), Virtual Reality (VR), and data analytics are ramping up, propelling the industry’s growth. Additionally, with sustainability dominating the fashion agenda lately, companies are aggressively expanding their sustainable assortments and boosting supply chains.
Given this backdrop, fashion stocks Hugo Boss AG (BOSSY), Chico's FAS, Inc. (CHS), Nordstrom, Inc. (JWN), Macy's, Inc. (M), and Dillard's, Inc. (DDS), which are currently trading at discounts to their peers, could be solid additions to one’s portfolio.
Hugo Boss AG (BOSSY)
Headquartered in Metzingen, Germany, BOSSY develops, markets, and distributes clothes, shoes, and accessories for men and women worldwide.
BOSSY’s sales increased 55.3% year-over-year to €772 million ($813.44 million) in the fiscal quarter ended March 2022. Its gross profit grew 58.7% from the year-ago value to €476 million ($501.55 million). Net income increased 425% year-over-year to €26 million ($27.40 million). Also, its EPS came in at €0.35, up 369.2% from the prior-year quarter.
Analysts expect BOSSY’s revenue for the fiscal quarter ending June 2022 to come in at $787.59 million, indicating an increase of 5.8% year-over-year. Also, the company’s revenue is expected to grow 10.4% year-over-year to $3.38 billion in the ongoing fiscal year. It surpassed the consensus EPS estimates in three of the trailing four quarters.
In terms of its forward EV/EBITDA, BOSSY is currently trading at 6.20x, 22.6% lower than the industry average of 8.01x. Its trailing-12-months Price/Cash Flow multiple of 4.59 is 55.6% lower than the industry average of 10.33.
BOSSY gained 3% intraday to close yesterday’s trading session at $10.66.
BOSSY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
BOSSY also has an A grade in Growth and Quality and a B in Value. It is ranked #2 of 68 stocks in the B-rated Fashion & Luxury industry.
Beyond what is stated above, we’ve also rated BOSSY for Momentum, Sentiment, and Stability. Get all the BOSSY ratings here.
Chico's FAS, Inc. (CHS)
CHS operates as an omnichannel specialty retailer of women's private branded casual-to-dressy clothing, intimates, and complementary accessories.
In March 2022, CHS announced the advancement of digital-first capabilities with new mobile shopping apps across the company’s brands to unify customers' omnichannel shopping. These enhanced digital capabilities should help expand its market reach.
For the fiscal quarter ended April 30, 2022, CHS’ total net sales increased 39.4% year-over-year to $540.92 million. Its income from operations grew 703.5% from the year-ago value to $45.41 million. Net income for the quarter stood at $34.93 million, reflecting a 491.2% increase year-over-year. Moreover, its net income per share was $0.28, up 450% from the prior-year quarter.
Street expects CHS’ revenue in the quarter ending July 2022 to come in at $543.90 million, indicating an increase of 15.2% year-over-year. Its EPS is expected to improve 19.1% year-over-year to $0.25. CHS also beat the consensus EPS estimates in each of the trailing four quarters.
In terms of its forward EV/EBITDA, CHS is currently trading at 6.51x, 18.7% lower than the industry average of 8.01x. Its forward Price/Sales multiple of 0.33 is 61.4% lower than the industry average of 0.86.
CHS’ shares have gained 21.3% over the past month to close the last trading session at $5.24.
CHS’ sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system.
The company has an A grade in Quality and a B in Value and Growth. The stock is ranked #4 in the Fashion & Luxury industry. To get CHS’ ratings for Momentum and Sentiment, click here.
Nordstrom, Inc. (JWN)
JWN, a fashion retailer, provides apparel, shoes, beauty, accessories, and home goods for women, men, young adults, and children.
On April 26, JWN announced its plans to open a new Nordstrom Rack in the spring of 2023 to be located in NOHO West, a mixed-use complex in the North Hollywood neighborhood of Los Angeles, CA. JWN expects the new location to help the company strengthen its network and better serve customers by bringing them brands they love at the best prices.
JWN’s net sales increased 18.7% year-over-year to $3.47 billion in the fiscal quarter ended April 30, 2022. Its net earnings grew 112% from the year-ago value to $20 million, while its EPS improved by 112.4% year-over-year to $0.13.
JWN’s revenue for the fiscal quarter ending July 2022 is expected to improve 8.9% year-over-year to $3.98 billion. The consensus EPS estimate of $0.81 for the same quarter indicates an increase of 65.9% year-over-year.
In terms of its forward EV/Sales, JWN is trading at 0.51x, 49.8% lower than the industry average of 1.02x. Its forward Price/Sales multiple of 0.24 is 71.5% lower than the industry average of 0.86.
JWN’s shares have gained 3.2% year-to-date to close the last trading session at $23.34. It.
The company has an overall B rating, translating to Buy in our proprietary rating system. JWN is rated A in Value and B in Quality and Growth. Within the same industry, it is ranked #13.
Click here to see additional POWR Ratings for Stability, Momentum, and Sentiment for JWN.
Macy's, Inc. (M)
M, an omnichannel retail organization, operates stores, websites, and mobile applications. The company sells a range of merchandise, such as apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods.
On March 31, M announced its plans to open a new 1.4 million-square-foot, automated direct-to-consumer fulfillment center in North Carolina in 2024 to meet the growing demands of its omnichannel business. “This state-of-the-art facility is a significant milestone for Macy’s, Inc. as we invest in strengthening our omnichannel ecosystem. It will support growth of our business as a leading omnichannel retailer," said Dennis Mullahy, Macy’s, Inc.’s chief supply chain officer.
M’s net sales increased 13.6% year-over-year to $5.35 billion in the fiscal first quarter of 2022. Its net income improved 177.7% year-over-year to $286 million over the period, while its adjusted EBITDA and EPS increased 44.6% and 176.9% from its year-ago values to $684 million and $1.08, respectively.
Analysts expect M’s revenue for the fiscal year ending January 2023 to come in at $24.58 billion, indicating a marginal increase year-over-year. M also beat the consensus EPS estimates in all the trailing four quarters, which is impressive.
In terms of its forward P/E, M is currently trading at 4.47x, 62.2% lower than the industry average of 11.82x. Its forward E.V./Sales multiple of 0.44 is 57.4% lower than the industry average of 1.02.
The stock has gained 4.8% over the past year to close the last trading session at $23.34.
It is no surprise that M has an overall rating of B, equating to Buy in our POWR Ratings system. The stock has an A grade in Value and Quality. In the Fashion & Luxury industry, M is ranked #14.
In addition to the POWR Rating grades I’ve just highlighted, you can see the M’s ratings for Momentum, Growth, Sentiment, and Stability here.
Dillard's, Inc. (DDS)
DDS operates retail department stores in the United States. Its stores offer merchandise, including fashion apparel for women, men, and children, accessories, cosmetics, home furnishings, and other consumer goods.
DDS’ net sales increased 21.3% year-over-year to $1.61 billion in the fiscal quarter ended April 30, 2022. Its net income grew 58.7% from the year-ago value to $251.10 million, while its EPS increased 88.7% year-over-year to $13.68. Also, its net cash provided by operating activities came in at $365.20 million, up 20.8% from the prior-year quarter.
DDS’ revenue is expected to grow 0.14% year-over-year to $6.63 billion in the fiscal year ending January 2023. It also beat the consensus EPS estimates in each of the trailing four quarters.
In terms of its forward Price/Sales, DDS is currently trading at 0.73x, 14.7% lower than the industry average of 0.86x. Its forward P/E multiple of 10.11 is 14.5% lower than the industry average of 11.82.
The stock has gained 60.2% over the past year to close the last trading session at $258.95.
DDS’ POWR Ratings reflect this promising outlook. The company has an overall rating of B, translating to Buy in our proprietary rating system. DDS is rated A in Value and Quality. The stock is ranked #17 in the Fashion & Luxury industry.
Click here to see additional POWR Ratings for Momentum, Growth, Stability, and Sentiment for DDS.
BOSSY shares were trading at $10.66 per share on Thursday morning, up $0.31 (+3.00%). Year-to-date, BOSSY has declined -10.07%, versus a -20.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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