E-commerce, which has been a savior for the retail sector during the pandemic, has been witnessing a slowdown lately as millions have once again started stepping out of their homes and visiting physical stores. Even then, e-commerce is playing an important role in driving overall retail sales.
One segment that is pushing online sales is the fashion and apparel industry. In fact, the overall apparel market has been doing well for quite some time and has outperformed the retail sector as demand for new clothes has been soaring ever since the economy started reopening. This has been helping stocks like Boot Barn Holdings, Inc. BOOT, Canada Goose Holdings Inc. GOOS, J.Jill, Inc. JILL and Designer Brands Inc. DBI which have a strong online presence.
E-Commerce Sales Still Strong
According to a report from e-Marketer, online retail sales are projected to surpass $1 trillion in 2022 for the first time. This shows how people have become a lot more dependent on e-commerce.
E-commerce had long been part of the retail landscape but people started depending on it only after the COVID-19 outbreak as they felt safer shopping from home to maintain social distance. This saw online sales not only picking up but also saving the retail sector from total collapse.
However, people once again started visiting physical stores following the massive vaccination drive as they felt safer stepping out of their homes, and the government started easing restrictions.
Despite the recent slowdown in retail sales, e-commerce is still playing a dominant role. In fact, retail sales jumped from 15% in 2019 to 21% in 2021 and are now at around 22%, according to a MorganStanley report.
The report also mentions that e-commerce retail sales are projected to reach 27% to $5.6 trillion by 2026. This shows the underlying strength of the e-commerce medium.
Online Apparel Sales Driving E-commerce
One of the major reasons behind e-commerce getting a push is soaring online sales of apparel. According to the e-commerce industry trend report, published by e-commerce platform BigCommerce, apparel and fashion goods have been playing an integral role in driving online retail sales.
The survey carried out among merchants showed that apparel and fashion accessories outpaced other industries in online sales in the first quarter of 2022. The report shows that overall global e-commerce sales increased 3%, but online apparel and fashion sales soared 19% in the first quarter of 2022.
Also, online order volume for fashion accessories and apparel grew 13% in the first quarter on a year-over-year basis but general e-commerce grew just 3%.
The apparel industry has been doing well for quite some time. People hardly bought new clothes during 2020 as the economy remained closed and most people worked and learned from home.
However, things started changing after the vaccination drive and easing of restrictions. Even then, sales were not that high in 2021 as the Omicron and Delta variants of the coronavirus pushed people back indoors.
Things finally started changing from the end of 2021 and this year has been great as traveling has picked up and people are also planning vacations. This has been driving apparel sales but people are still relying on e-commerce as they have finally realized the comfort of shopping online.
Our Choice
Given this scenario, it would be wise to invest in these four apparel stocks with a strong online presence. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Boot Barn Holdings, Inc. operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. BOOT’s products include boots, denim, western shirts, cowboy hats, belts and belt buckles, and western-style jewelry and accessories. Boot Barn sells its products through bootbarn.com, an e-commerce Website.
Boot Barn Holdings’ expected earnings growth rate for the current year is 4.4%. The Zacks Consensus Estimate for current-year earnings has improved 19.1% over the past 60 days. Boot Barn Holdings sports a Zacks Rank #1.
Canada Goose Holdings Inc.is a global outerwear brand. Canada Goose is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. GOOS’s jackets are sold in 36 countries around the world, including in two owned retail stores and four e-commerce stores.
Canada Goose Holdings’ expected earnings growth rate for the current year is 64.4%. The Zacks Consensus Estimate for current-year earnings has improved 6.7% over the past 60 days. GOOS has a Zacks Rank #2.
J.Jill, Inc. operates as a specialty retailer of women’s apparel. JILL offers sweaters, tops, pants, dresses, shorts, skirts, sleepwear and accessories. J. Jill markets through retail stores, website and catalog.
J.Jill’s expected earnings growth rate for the current year is 25.4%. The Zacks Consensus Estimate for current-year earnings has improved 19.2% over the past 60 days. JILL carries a Zacks Rank #1.
Designer Brands Inc. designs, produces and retails footwear and accessories. DBI offers shoes, boots, sandals, sneakers, socks, handbags and accessories. Designer Brands’operating segment consists of DSW segment, which includes DSW stores and dsw.com and the Affiliated Business Group segment.
Designer Brands’ expected earnings growth rate for the current year is 16.5%. The Zacks Consensus Estimate for current-year earnings has improved 7.6% over the past 60 days. DBI holds a Zacks Rank #1.
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