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It's tough out there for retailers these days. Nearly 10,000 stores closed last year, marking the greatest number of closures since data has been kept. Mall vacancies are at their highest since 2012, and department store chains, the great standbys of 20th century retail, are fast downsizing.
However, the economy is still thriving, and a number of apparel stocks have surged in recent months as the worst of the "retail apocalypse" appears to have passed. Retail stocks may not be the first place investors look for big returns, but all three of these stocks have tripled over the past year. Let's see why Vince Holding (NYSE: VNCE), Canada Goose (NYSE: GOOS), and Fossil Group (NASDAQ: FOSL) have all soared.
1. Vince Holding (up 260%)
Up 260% since last year, Vince Holding's gains have stayed largely under the radar even as the parent of the Vince chain of luxury clothing stores has posted better numbers than expected. In its most recent quarter, direct-to-consumer sales increased 15% and comparable sales were up 12.5%, with strong growth in the company's full-price stores.
The company is still facing broad challenges: Revenue was down in the recent quarter by 6% due to a planned decline in the wholesale division as the company reduces the number of retail partners it sells to. Gross margin improved 2.7 percentage points to 46.8% due to the shift to direct sales, however, and the company's bottom-line loss narrowed significantly from -$1.88 to -$0.49. Vince stock is up nearly 50% since that report, as the news seems to confirm expectations of a comeback.
Image source: Canada Goose.
2. Canada Goose (up 191%)
Like Vince Holding, Canada Goose is a luxury brand that has surged over the last year. But its recent IPO puts it in a different class from Vince. Rather than being caught in the midst of a turnaround, Canada Goose shares have exploded -- the company is unlocking the power of a unique brand of high-end winter coats, and expanding carefully. It's adding a handful of stores around the world, and expanding the reach of its e-commerce business.
The stock skyrocketed 33% on June 15 after it announced that revenue soared 144% to 124.9 million Canadian dollars, easily beating estimates. Gross margin expanded 830 basis points to 62.7% as the company transitions away from a wholesale model to a direct-to-consumer one. That strategy also led to a surprise profit of CA$0.09, up from a loss of CA$0.15 a year ago.
At the same time, the company announced three new stores in North America as it continues its methodical expansion. It also recently outlined its strategy in China. As a result, Canada Goose is the rare apparel company that investors see as a growth stock.