The Zacks defined Retail – Apparel and Shoes industry comprises companies that design, source and market clothing, footwear and accessories for men, women and children under various brand names. Industry players have been benefiting from strong consumer demand for activewear, athleisure and footwear.
At this stage, it would be prudent to invest in apparel and shoes stocks with a favorable Zacks Rank. Here we recommend five such stocks that have enormous price upside potential for the near term. These are Deckers Outdoor Corp. DECK, Tapestry Inc. TPR, Urban Outfitters Inc. URBN, Stitch Fix Inc. SFIX and On Holding AG ONON.
Positive Catalysts
Athletic goods and apparel companies offer products ranging from footwear, sweatshirts, leggings, pants, jackets and tops to yoga wear and running clothes for men and women. The increasing focus on fashion is boosting the demand for innovative clothes and footwear in the United States.
Industry participants have been focused on product innovations, active promotions, store expansion and enhancing e-commerce capabilities to gain market share. Favorable health and wellness trends have been the key to inspiring footwear manufacturers to expand their product portfolios.
The companies continue to innovate styles, materials and colors, and incorporate functional designs to grab a large share of the fast-growing market. Multi-functional shoes, which cater to casual and formal looks, have been gaining popularity.
E-commerce has been playing a crucial role in the athleisure market’s growth. The companies in this segment are looking to build a customer base through websites, social media and other digital channels.
As consumers continue to shop from home, the growth of athletic-inspired apparel and digital sales is likely to continue. Companies focused on expanding their athletic-based apparel lines and building on e-commerce capabilities are expected to witness growth in the long run.
Efforts to accelerate deliveries through investments in supply chains and order fulfillment avenues are likely to provide an edge to industry players. Simultaneously, companies are investing in renovation and improved checkouts, as well as mobile point-of-sale capabilities, to make stores more attractive. Efforts to enhance experiences through multiple channels are likely to contribute significantly to improving traffic and transactions in stores and online.
5 Apparel and Shoes Stocks to Tap Enormous Gains
These stocks have strong revenues and earnings growth potential for 2025. Moreover, these stocks have seen positive earnings estimate revisions over the last 60 days. Each of our picks carries a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Deckers Outdoor Corp.
Zacks Rank #2 Deckers Outdoor’s diverse brand portfolio, financial strength, and strategic growth initiatives make it a promising investment. Driven by HOKA and UGG’s impressive growth, balanced channel performance, and successful global expansion, DECK shows a well-executed strategy.
DECK’s focus on innovation, expanding its consumer reach, and leveraging strong market trends positions it favorably for sustained success. DECK’s last-reported quarter’s results highlight growth in both direct-to-consumer and wholesale channels, alongside leading brand success. Management now envisions a 15% increase in fiscal 2025 net sales.
Astonishing Price Upside Potential for DECK Stock
Deckers Outdoor has an expected revenue and earnings growth rate of 10.1% and 12.2%, respectively, for next year (ending March 2026). The Zacks Consensus Estimate for next-year earnings has improved 3.8% over the last 60 days.
The average short-term price target of brokerage firms represents an increase of 87.6% from the last closing price of $124.68. The brokerage target price is currently in the range of $154 to $284. This indicates a maximum upside of 127.8% and no downside.
Tapestry Inc.
Zacks Rank #2 Tapestry saw robust revenue growth, driven by Coach's exceptional performance, alongside improved profitability. International expansion is yielding positive results in key regions. TPR’s direct-to-consumer and digital strategies continue to be key differentiators, enabling margin expansion and customer engagement in the second quarter of fiscal 2025.
TPR raised its full-year outlook, reflecting confidence. TPR expects revenues of $6.85 billion in fiscal 2025, suggesting 3% year-over-year growth on a reported basis. This is ahead of the previous guidance of $6.75 billion.
Attractive Price Upside Potential for TPR Shares
Tapestry has an expected revenue and earnings growth rate of 3% and 14.5%, respectively, for the current year (ending June 2025). The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the last 60 days.
The average short-term price target of brokerage firms represents an increase of 22.1% from the last closing price of $75.72. The brokerage target price is currently in the range of $75 to $110. This indicates a maximum upside of 45.3% and a downside of a mere 0.1%.
Urban Outfitters Inc.
Urban Outfitters saw strong growth across its Retail, Wholesale, and Subscription segments. Anthropologie and Free People drove Retail segment gains, while Free People Wholesale and FP Movement expanded significantly in the last-reported quarter. URBN’s Nuuly segment achieved profitability and continued rapid subscriber growth.
URBN pursued aggressive store expansion, particularly for Free People and Anthropologie, reinforcing its confidence in future demand. URBN’s gross margins improved due to lower markdowns and operational efficiencies. We estimate adjusted gross margin to improve 90 basis points year over year to 35.7% in fiscal 2026.
Solid Price Upside Potential for URBN Stock
Urban Outfitters has an expected revenue and earnings growth rate of 6.6% and 14.5%, respectively, for the current year (ending January 2026). The Zacks Consensus Estimate for current-year earnings has improved 2.4% over the last seven days.
The average short-term price target of brokerage firms represents an increase of 20.5% from the last closing price of $53.58. The brokerage target price is currently in the range of $42 to $70. This indicates a maximum upside of 30.6% and a downside of 21.6%.
Stitch Fix Inc.
Stitch Fix’s transformation strategy is showing strong progress, with significant improvements in inventory freshness and sales of key products. SFIX’s use of AI tools has optimized inventory management, ensured timely delivery of products and enhanced client satisfaction. SFIX’s dual-brand strategy, focusing on private and national brands, has enhanced its market position.
Operational efficiency has also improved, with reduced costs and higher EBITDA margins in the fiscal first quarter. Also, SFIX’s debt-free balance sheet provides financial flexibility and enabling strategic investments in growth and innovation. SFIX’s marketing efforts have boosted brand awareness and client engagement.
Massive Price Upside Potential for SFIX Shares
Stitch Fix has an expected revenue and earnings growth rate of -7.7% and 60.6%, respectively, for the current year (ending July 2025). The Zacks Consensus Estimate for current-year earnings has improved 11.4% over the last 30 days.
The average short-term price target of brokerage firms represents an increase of 32% from the last closing price of $3.8. The brokerage target price is currently in the range of $3 to $6. This indicates a maximum upside of 57.9% and a downside of 2.1%.
On Holding AG
On Holding is engaged in the development and distribution of sports products worldwide. ONON offers athletic footwear, apparel, and accessories for high-performance running, outdoor, training, all-day activities, and tennis. ONON offers its products through independent retailers and distributors, online, and stores.
Tremendous Price Upside Potential for ONON Shares
On Holding has an expected revenue and earnings growth rate of 27.4% and 5.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.4% over the last 30 days.
The average short-term price target of brokerage firms represents an increase of 36.9% from the last closing price of $48.32. The brokerage target price is currently in the range of $47 to $73. This indicates a maximum upside of 51.1% and a downside of 2.7%.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
Tapestry, Inc. (TPR) : Free Stock Analysis Report
Stitch Fix, Inc. (SFIX) : Free Stock Analysis Report
On Holding AG (ONON) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
