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Malls may be dead or at least very sick, but, as Lululemon Athletica Inc. (NASDAQ:LULU) Q4 2017 results showed, apparel makers are still very much alive and kicking. And the rally in lululemon stock showed that fitness apparel stocks can still be quite profitable for investors.
As I mentioned previously, lululemon’s apparel is obviously still quite appealing to the many women and the growing number of men who participate in yoga. As a result, the company’s results were quite impressive, and lulu stock rallied.
Two other apparel stocks poised to benefit from strong ongoing trends are Under Armour Inc (NYSE:UA, NYSE:UAA) and Fitbit Inc (NYSE:FIT) Both Under Armour stock and Fitbit stock should get boosts from the popularity of fitness in general and jogging in particular. Additionally, both names have made important strides (pun intended) in recent months in the areas of product and personnel. With all of that said, let’s dive deeper into what makes these apparel stocks shine.
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Apparel Stocks to Buy: Lululemon
The company’s apparel is clearly becoming much more popular and profitable, as its earnings-per-share jumped 33% year-over-year, its “normalized gross margin” rose 2% year-over-year, and its e-commerce revenue jumped 42%, excluding currency fluctuations.
Lululemon continues to grow by leaps and bounds abroad, as its comparable store sales jumped 52% in Asia, while its digital comp sales in the country “grew in the triple digits.” And in Europe, Lululemon had “total market growth” of 42% last quarter.
Lululemon’s first quarter guidance was also impressive, as it predicts that its comparable sales will jump by “low double digits,” while its top- and bottom-line guidance came in above expectations. Meanwhile, yoga has become more popular, as Self reported in January. It looks like Lululemon stock will perform very well in coming quarters and years.
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Apparel Stocks to Buy: Under Armour
Under Armour stock has struggled in recent years, but it seems like better days are ahead for the company and the stock, driven by powerful growth overseas and strong demand for its new high tech products in the U.S.
There were a number of significant bright spots in the company’s fourth-quarter results, reported in February, including a 9% year-over-year increase in the company’s footwear sales and a 55.7% increase in its Asia-Pacific revenue. Meanwhile, its revenue from the EMEA region jumped 45.5% . As Quartz pointed out in February, “Particularly in China, Under Armour is flourishing … as the world’s most populous country’s middle class grows, giving millions more leisure time and disposable income to spend on activities such as sports, Under Armour is one of the companies riding the wave.”