Are These 3 Clothing Retailers All Dressed Up And Ready To Rally?

Clothing retailers including Revolve Group NYSE: RVLV, Boot Barn NYSE: BOOT and Lands’ End NASDAQ: LE are trading at new highs as customers spruce up long-neglected wardrobes.

As you might imagine, walk-in traffic is increasing at retail locations, but online ordering took off and businesses are adapting to that new reality. 

Pandemic-era store closures accelerated the need for retailers of all types to upgrade their e-commerce capabilities. Industry-wide, retailers were able to reduce key metrics such as days to ship and reduction of dead stock, inventory that’s been sitting around unsold, taking up space without much likelihood of being sold any time soon.  

On top of that, fashion trends shifted as people literally got comfortable working from home, ditching office wear for sweats. 

In addition to store closures and reduced need for new clothing in 2020, heavy discounts also affected profitability last year. However, those headwinds appear to be receding. 

As a whole, the apparel retailers’ industry group is trading at new highs, and has been topping other industries in price performance in the past several months.

Revolve Group went public in June 2019, and was already forming its first post-IPO base by February 2020, when the Covid-related market selloff began. After beginning its uptrend in May of last year, the stock notched a gain of 345.79% in the past year.

Year-to-date it’s up 127.69%. Shares closed Tuesday at $70.97, down $0.87, or 1.21%. It’s currently finding support above its 10-day average, as well as longer-term averages. 

One big factor giving the stock a boost lately: It was added to the Russell 3000 index in June, and simultaneously became part of the Russell 1000 and 2000 indexes. That means shares were purchased by funds tracking those indexes.

Shares were up 24.28% in June. So far this month, the stock has tacked on another 3%.

Revenue growth accelerated in the past three quarters, and revenue growth resumed in the most recent quarter. This year, analysts forecast earnings of $0.84 per share, a gain of 65. That’s seen increasing dramatically next year, growing 26% to $1.06 per share. 

Boot Barn is also a fairly new IPO, having gone public in October 2014. The company operates 273 stores in 36 states, selling Western-style clothing and work apparel of the non-office variety. 

Since rallying out of its Covid base, beginning in April 2020, it’s been kicking up its heels, steadily running up to a new high. The stock is currently forming a flat base just below its June 25 high of $86.70. So far, it’s corrected 13% from peak to trough in its base.

Boot Barn has earnings momentum going for it. Annual earnings per share have been rising for the past four years. Analysts expect net income of $3.15 per share this year, a gain of 63%. That’s seen rising by another 6% in 2022, to $3.39 per share. 

Revenue has also been growing for the past three years, although the company saw some year-over-year slowdowns in the first three quarters of 2020. 

Helping to propel the price higher is growing institutional support. The number of mutual funds owning shares of Boot Barn grew in each of the past three quarters. 

Lands’ End is a familiar name, having been around for decades as a catalog retailer. It went public in 2014 after being spun off from, of all things, Sears. 

The post-pandemic world has been good for this stock. On a three-year basis, shares are up 14.56%. That number reflects the stock struggling to gain traction in 2018 and 2019. 

The big change recently is apparent, however, with a 369.27% one-year gain. Year-to-date, Lands’ End is up 81.22%. Shares closed Tuesday at $39.09, down $2.14, or 5.19%. 

The stock rocketed out of a cup-with-handle base on June 30, clearing a buy point above $37.39. It’s still in buy range after that breakout, trading 4.5% above the buy point.