The luxury goods industry, despite facing macroeconomic challenges, exhibits strong potential for growth. Online shopping and social media’s impact on fashion trends have expanded the accessibility of luxury brands across the globe. In this report, we will explore the fundamentals of three key luxury goods stocks that investors may find intriguing: Oxford Industries, Inc. (OXM), Guess?, Inc. (GES), and J. Jill, Inc. (JILL).
Luxury Goods Industry Outlook
Amid the pandemic, the luxury goods industry demonstrated resilience, outperforming other sectors and improving profit margins. The industry’s growth can be attributed to the influence of social media and digital platforms, which have driven global demand for luxury goods. The global luxury goods market is expected to reach $392.40 billion by 2030, growing at a CAGR of 4.7%. Factors contributing to this growth include rising disposable income, evolving consumer preferences, and the widespread adoption of online shopping platforms. Additionally, the global luxury fashion market is projected to reach $294.70 billion by 2028, growing at a CAGR of 3.6%. Various factors influence luxury fashion, including social media campaigns, celebrity endorsements, and the integration of AI to enhance customer experiences.
Stock #3: Oxford Industries, Inc. (OXM)
Oxford Industries, Inc. (OXM) is an apparel company known for designing, sourcing, marketing, and distributing products under various lifestyle brands such as Tommy Bahama, Lilly Pulitzer, and Southern Tide. Key highlights of OXM’s financial performance include a trailing-12-month net income margin of 10.53%, significantly higher than the industry average. Its trailing-12-month EBIT margin of 14.02% and Return on Total Assets of 14.06% also outperform industry averages. For the second quarter ending July 29, 2023, OXM reported a 15.7% year-over-year increase in net sales to $420.32 million and an adjusted net earnings of $55.10 million with an adjusted EPS of $3.45. OXM is expected to see a 4.5% increase in revenue for the quarter ending October 31, 2023.
Stock #2: Guess?, Inc. (GES)
Guess?, Inc. (GES) is a company known for designing, marketing, and distributing lifestyle collections of apparel and accessories. It operates through various segments and has shown strong financial indicators. GES boasts a trailing-12-month Return on Common Equity of 31.87%, a trailing-12-month Return on Total Assets of 5.82%, and a trailing-12-month Return on Total Capital of 8.39%, all exceeding industry averages. In the fiscal second quarter ending July 29, 2023, GES reported a 3.4% year-over-year increase in net revenues to $664.51 million. Its gross profit rose 8.9% year-over-year to $294.44 million, and adjusted net earnings attributable to GES increased by 73.6% year-over-year to $39.71 million. Analysts expect GES to see a 40.6% increase in EPS and a 3.6% increase in revenues for the quarter ending October 31, 2023.
Stock #1: J. Jill, Inc. (JILL)
J. Jill, Inc. (JILL) operates as an omnichannel retailer of women’s apparel. JILL has consistently demonstrated strong financial performance with a trailing-12-month EBIT margin of 13.52%, a gross profit margin of 69.50%, and a Return on Common Equity of 812.14%, all surpassing industry averages. In the fiscal second quarter ending July 29, 2023, JILL reported net sales of $155.67 million, gross profit of $111.41 million, and adjusted net income of $15.81 million, with an adjusted EPS of $1.10. For the quarter ending January 31, 2024, analysts expect a 27.3% increase in EPS and a 1.6% increase in revenue to $150 million. Over the past year, JILL’s stock has gained 57%.
J. Jill, Inc. has earned an overall rating of A in the POWR Ratings system, indicating a Strong Buy. It also received an A grade for Sentiment and Quality, and it is ranked #2 in the Fashion & Luxury industry. The POWR Ratings system considers various factors, including Growth, Value, Momentum, and Stability, among others.
In summary, these luxury goods stocks display promising fundamentals, making them appealing options for investors seeking opportunities in the evolving luxury goods industry. Investors are encouraged to conduct thorough research and consider their financial goals and risk tolerance when making investment decisions.
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