Apparel Stocks Poised for Growth in 2025

Key Insights

• Apparel stocks thrive by offering value-focused products and expanding their reach through omnichannel strategies.
• Four apparel stocks poised for growth include Genesco, The Gap, Urban Outfitters, and Abercrombie & Fitch.
• These companies achieved year-over-year growth rates ranging from 14.2% to 51.2%.

The apparel industry looks toward an exciting year in 2025, with growth opportunities driven by innovation and changing consumer preferences. Companies are responding to a variety of demands, such as comfortable attire for hybrid work and athletic wear for fitness enthusiasts.

Success in this sector depends on providing value-oriented products and using omnichannel strategies to reach more customers. Genesco Inc. (GCO), The Gap, Inc. (GAP), Urban Outfitters, Inc. (URBN), and Abercrombie & Fitch Co. (ANF) are strategically positioned to harness these market opportunities. By synchronizing their product lines with consumer expectations and utilizing strong distribution networks, these companies enhance their market presence.

Technology is increasingly reshaping the operations of apparel businesses. Many brands employ AI-driven demand forecasting to maintain optimal stock levels. Enhanced e-commerce platforms are improving the shopping experience, addressing the rising demand for convenience. Moreover, data analytics and AI assist retailers in personalizing customer interactions, optimizing processes, and boosting sales.

Current trends such as social commerce, loyalty programs, and sustainability are setting the stage for the future of the apparel industry. Social media platforms now facilitate shopping through shoppable posts and influencer partnerships. Additionally, loyalty programs are becoming more tailored, offering specific rewards to engage customers.

On the broader economic front, easing inflation, a stable job market, and consistent wage growth are increasing disposable income, prompting consumers to spend more on discretionary items like clothing. Retailers that adopt competitive pricing and offer diverse product lines are particularly well-suited to thrive in this favorable environment.

Stock Performance Overview: GCO, GAP, URBN & ANF

Image Source: Zacks Investment Research

Four Notable Apparel Stocks to Consider

Genesco: Journeys Group Leading the Charge

Genesco is set for strong growth, driven by developments across its various segments. The Journeys division has excelled due to improved product offerings and targeted marketing efforts, allowing the company to quickly adapt to consumer preferences. A successful loyalty program and strong digital presence further bolster Genesco’s market position. Additionally, the company is working to revitalize its Schuh and Johnston & Murphy brands. GCO reported a remarkable 10% increase in comparable sales for the fourth quarter to date, ending December 28, 2024.

The Zacks Consensus Estimate predicts Genesco’s earnings per share (EPS) for the current financial year will grow by 58.9% compared to last year. This Zacks Rank #1 (Strong Buy) has a trailing four-quarter earnings surprise average of 36.9%.

Gap: Innovating Product Lines

Gap is well-positioned for growth with its strategic approach to enhancing brand visibility and customer loyalty. By prioritizing product innovations and relying on consumer data, the company is reshaping its offerings to better match evolving consumer needs. Investments in technology and digital platforms aim to create a streamlined shopping experience that emphasizes convenience and personalization. Furthermore, a focus on operational efficiency supports disciplined inventory and expense management, which drives profitability.

The Zacks Consensus Estimate indicates that Gap’s sales and EPS will grow by 0.8% and 41.3%, respectively, compared to last year. This Zacks Rank #1 company boasts a trailing four-quarter earnings surprise average of 101.2%.

URBN: Accelerated Growth of Nuuly

Urban Outfitters is on a solid growth path, buoyed by strong sales across its brands and operational efficiency. The success of labels like Anthropologie and Free People, combined with their rapid Nuuly expansion, provides a diverse growth avenue. Urban Outfitters’ emphasis on margin improvement, reduced markdowns, and optimized retail operations enhances their overall growth potential. URBN noted a 10% year-over-year increase in total net sales for the two months ending December 31, 2024.

According to the Zacks Consensus Estimate, Urban Outfitters expects its sales and EPS for the current financial year to grow by 6.6% and 20%, respectively, over last year. This Zacks Rank #1 company has a trailing four-quarter earnings surprise average of 22.8%.

Abercrombie & Fitch: Expanding Brand Recognition

Abercrombie & Fitch stands out as a solid investment pick, excelling in seamlessly integrating digital and physical retail experiences. This integration leads to increased customer satisfaction and loyalty. Targeted marketing campaigns in key markets have successfully elevated brand visibility and attracted new customers. Their introduction of innovative product lines meets customer needs and expands the brand’s appeal. ANF expects fourth-quarter net sales growth of 7% to 8%, significantly up from the prior estimate of 5% to 7%, reflecting a successful holiday season.

This prominent global retailer specializes in apparel and accessories for men, women, and children and is expected to maintain a strong market presence.