The growth of the luxury fashion market is driven by the increasing number of millionaires, increasing brand loyalty, and perceptions of luxury goods boosting social acceptance. Therefore, investors could consider investing in the top luxury stocks The Buckle, Inc. (BKE), Ralph Lauren Corporation (RL), and Caleres, Inc. (CAL) this year and beyond. These companies also pay stable dividends.
Rising personal income and increased disposable income are expected to drive demand in the fashion and luxury market, reflecting consumers' growing capacity for indulgent purchases and upscale experiences. In December 2023, personal income in the United States rose by $60 billion (0.3% monthly), and disposable personal income grew by $51.80 billion or 0.3%.
Fashion companies are expected to face a competitive landscape this year. However, shifting consumer preferences are anticipated to offer opportunities. According to McKinsey’s analysis of fashion forecasts, the global fashion industry will have a topline growth of 2% to 4%, with the luxury segment forecasted to generate the biggest share of economic profit.
By 2026, millennials and Gen Z are projected to comprise 75% of luxury goods buyers, driving significant changes in the industry, including the rise of resale and rental trends. Furthermore, the global luxury fashion market is projected to grow at a CAGR of 6.1% to reach $401.73 billion by 2028.
Considering these conducive trends, let’s examine the fundamentals of three Fashion & Luxury stock picks, beginning with the third one.
Stock #3: The Buckle, Inc. (BKE)
BKE is a retailer offering a diverse range of casual apparel, footwear, and accessories for young men and women. With an array of services, including personalized styling and a private label credit card, it serves customers both in-store and online.
On January 26, 2024, BKE paid a $0.35 per share quarterly dividend. The company pays $1.40 annually, which translates to a yield of 3.69% on the prevailing price level. Its four-year average dividend yield is 14.48%. The company has raised its dividend payouts at a CAGR of 15.9% and 7% over the past three and five years, respectively.
During the third quarter, which ended October 28, 2023, BKE reported net sales of $303.46 million. The company's net income and EPS amounted to $51.76 million and $1.04, respectively. As of October 28, 2023, its total liabilities amounted to $447.19 million, compared to its total liabilities of $461.27 million as of January 28, 2023.
BKE’s revenue and EPS are expected to be $1.26 billion and $4.25, respectively, for the fiscal year ended January 2024. The company surpassed the EPS estimates in three of the trailing four quarters, which is notable.
Its shares have gained 19.2% over the past nine months to close the last trading session at $37.92. It gained marginally intraday.
BKE’s POWR Ratings reflect its promising prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
BKE has an A grade for Quality. Within the B-rated Fashion & Luxury industry, it is ranked #17 among 62 stocks.
To see BKE’s additional POWR Ratings for Growth, Value, Momentum, Stability, and Sentiment, click here.
Stock #2: Ralph Lauren Corporation (RL)
RL is a global lifestyle brand offering diverse apparel, accessories, and home products through various retail channels worldwide. Its renowned brands, like Polo Ralph Lauren and Ralph Lauren Collection, cater to a broad consumer base with distinct tastes and preferences.
On January 12, 2024, RL paid a regular quarterly dividend of $0.75 per share. The company pays $3 annually, which translates to a yield of 2.04% on the prevailing price level. Its four-year average dividend yield is 2.11%. The company has raised its dividend payouts at a CAGR of 63.4% and 4.8% over the past three and five years, respectively.
In the second quarter, which ended September 30, 2023, RL’s net revenues rose 3.4% year-over-year to $1.63 billion. The company reported adjusted net income and net income per common share of $140.90 million and $2.10, respectively. As of September 30, 2023, its total liabilities amounted to $4.35 billion, compared to its year-ago quarter’s total liabilities of $4.48 billion.
Street anticipates RL’s revenue and EPS to grow 1.6% and 65.9% year-over-year to $1.57 billion and $1.49, respectively, for the fiscal fourth quarter ending March 2024. The company surpassed the revenue and EPS estimates in each of the trailing four quarters.
RL’s shares have gained 30.1% over the past three months to close the last trading session at $147.34.
RL’s POWR Ratings reflect its robust prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
RL has a B grade for Quality. Within the same industry, it is ranked #12.
In addition to the POWR Ratings stated above, one can access RL’s additional Growth, Value, Momentum, Stability, and Sentiment ratings here.
Stock #1: Caleres, Inc. (CAL)
CAL is a footwear company, operating in retail and wholesale sectors across various regions globally. It offers a diverse range of licensed, branded, and private-label footwear products through its Famous Footwear and Brand Portfolio segments.
On January 5, 2024, CAL paid a regular quarterly cash dividend of $0.07 per share. The company pays $0.28 annually, which translates to a yield of 0.86% on the prevailing price level. Its four-year average dividend yield is 1.72%. Moreover, the company boasts a 24-year record for consecutive years of dividend payments.
CAL’s net sales amounted to $761.90 million in the third quarter that ended October 28, 2023. For the same quarter, the company's adjusted net earnings attributable to CAL and EPS increased 15.9% and 19.1% year-over-year to $48.62 million and $1.37, respectively. Also, its adjusted operating earnings rose 17.6% from the prior-year quarter to $66.72 million.
For the fiscal year 2023, the company expects its adjusted EPS to be in the range of $4.10 to $4.20.
Analysts expect CAL’s revenue to be $691.19 million for the fiscal fourth quarter ended January 2024. Its EPS for the same quarter is expected to grow 30.4% year-over-year to come in at $0.85. The company surpassed the EPS estimates in each of the trailing four quarters.
The stock has gained 41.3% over the past nine months to close the last trading session at $32.43. Its shares grew 2% intraday.
CAL’s optimistic fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
CAL has a B grade for Value and Quality. Within the same industry, it is ranked #10.
Click here for CAL’s additional Growth, Momentum, Stability, and Sentiment ratings.
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RL shares were trading at $146.35 per share on Wednesday afternoon, down $0.99 (-0.67%). Year-to-date, RL has gained 1.49%, versus a 4.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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