4 stocks to buy during the surge in online clothing sales – July 4, 2022
E-commerce, which saved the retail sector during the pandemic, has seen a downturn lately as millions of people have started to walk out of their homes and visit physical stores again. Even then, e-commerce plays an important role in boosting overall retail sales.
One segment that is driving online sales is the fashion and apparel industry. In fact, the overall apparel market has been doing well for some time and has outperformed the retail sector as demand for new clothing has soared since the economy began to reopen. This has helped actions like Boot Barn Holdings, Inc. (BOOT – free report), Canada Goose Holdings Inc. (GOOS – free report), J. Jill, Inc. (Jill – free report) and Designer Brands Inc. (DBI – Free Report) that have a strong online presence.
E-commerce sales still strong
According to a report by e-Marketer, online retail sales are expected to surpass $1 trillion in 2022 for the first time. This shows how people have become much more dependent on e-commerce.
E-commerce had long been a part of the retail landscape, but people didn’t start relying on it until after the COVID-19 outbreak, as they felt safer shopping from home to to maintain social distancing. This not only allowed online sales to pick up, but also saved the retail sector from total collapse.
However, people started visiting physical stores again after the mass vaccination campaign as they felt safer leaving their homes, and the government began to ease restrictions.
Despite the recent slowdown in retail sales, e-commerce continues to play a prominent role. In fact, retail sales have grown from 15% in 2019 to 21% in 2021 and are now around 22%, according to a MorganStanley report.
The report also mentions that e-commerce retail sales are expected to grow by 27% to reach $5.6 trillion by 2026. This shows the underlying strength of e-commerce.
Online clothing sales drive e-commerce
One of the main reasons for the rise of e-commerce is the surge in online clothing sales. According to the E-Commerce Industry Trends Report, published by e-commerce platform BigCommerce, apparel and fashion items have played a vital role in boosting online retail sales.
The merchant survey showed that fashion apparel and accessories topped other industries in online sales in the first quarter of 2022. The report shows that overall global e-commerce sales increased by 3%, but online clothing and fashion sales soared 19% in the first quarter of 2022.
Additionally, online order volume for fashion accessories and apparel grew 13% in the first quarter on a year-on-year basis, but general e-commerce grew only 3%.
The garment industry has been doing well for some time. People barely bought new clothes in 2020 as the economy remained closed and most people were working and learning from home.
However, things started to change after the vaccination campaign and the easing of restrictions. Even then, sales weren’t that high in 2021, as the Omicron and Delta variants of the coronavirus pushed people indoors.
Things finally started to change from the end of 2021 and this year has been great as travel has resumed and people are also planning vacations. This has boosted clothing sales, but people still rely on e-commerce as they have finally realized the convenience of shopping online.
Given this scenario, it would make sense to invest in these four clothing stocks with a strong online presence. Each of the stocks carries a Zacks rank of No. 1 (Strong Buy) or 2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks here.
Boot Barn Holdings, Inc. is a chain of lifestyle stores devoted to western and work-related footwear, clothing and accessories. BOOT’s products include boots, jeans, western shirts, cowboy hats, belts and belt buckles, as well as western-style jewelry and accessories. Boot Barn sells its products through bootbarn.com, an e-commerce website.
Boot Barn Holdings’ projected 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 #1 Zacks rank.
Canada Goose Holdings Inc.is a global outerwear brand. Canada Goose is a designer, manufacturer, marketer and retailer of premium outerwear for men, women and children. GOOS jackets are sold in 36 countries around the world, including two company-owned retail stores and four e-commerce stores.
Canada Goose Holdings’ forecast 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. The GOOS has a Zacks rank #2.
J. Jill, Inc. is a specialty retailer of women’s clothing. JILL offers sweaters, tops, pants, dresses, shorts, skirts, sleepwear and accessories. J. Jill markets through retail stores, website and catalog.
J.Jill’s forecast 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 wears a Zacks rank #1.
Designer Brands Inc. designs, produces and sells shoes and accessories. DBI offers shoes, boots, sandals, sneakers, socks, handbags and accessories. The Designer Brands operating segment includes the DSW segment, which includes DSW and dsw.com stores and the Affiliated Business Group segment.
Designer Brands’ forecast 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 #1 Zacks rank.