Investors grew concerned when the consumer price index rose 6.2% year-over-year in October 2021, its biggest climb since December 1990. Furthermore, current supply chain constraints continue to perplex retailers. However, according to Statista, apparel sales in the United States grew by 47.5% year-over-year in October 2021. And retail sales increased by 1.7% in October 2021, its third straight monthly advance.
The holiday season sales started earlier this year, benefiting retailers. And the apparel retail industry is expected to grow further with an increased focus on e-commerce. According to a Technavio report, the online apparel retailing market is expected to grow at a 10.6% CAGR through 2025.
Hence, Wall Street analysts expect quality apparel retail stocks Abercrombie & Fitch Co. (ANF) and Tilly's, Inc. (TLYS) to rally by 35% or more in price in the near term. So, we think these stocks could be good additions to one's portfolio.
Abercrombie & Fitch Co. (ANF)
Multi-brand omnichannel specialty retailer ANF, which is headquartered in New Albany, Ohio, operates through two segments: Hollister and Abercrombie. The company offers an assortment of apparel, personal care products, intimates, and accessories for men, women, and children.
ANF announced on October 28 that it had launched a same-day delivery service across its entire U.S. store fleet. The company’s executive vice president, supply chain and procurement, Larry Grischow, said, “We’re thrilled to add same-day delivery as another option in our portfolio of omnichannel services, which also include purchase online pick up in store, curbside pickup, reserve in store, ship from store and traditional parcel home delivery.”
ANF’s net sales were $905.16 million for its fiscal third quarter, ended October 30, 2021, up 10.4% year-over-year. The company’s adjusted non-GAAP net income came in at $52.61 million, up 9.1% year-over-year. Also, its adjusted non-GAAP EPS increased 13.2% year-over-year to $0.86.
For its fiscal year 2022, analysts expect ANF’s revenue to increase 21.3% year-over-year to $3.79 billion. The company’s EPS is expected to grow 750.7% year-over-year to $4.75 in the current year. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 68.8% in price to close yesterday’s trading session at $36.89. Wall Street analysts expect the stock to hit $50.67 in the near term, which indicates a potential 37.4% upside.
ANF’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Tilly's, Inc. (TLYS)
Irvine, Calif.-based TLYS is a specialty retailer of casual apparel, footwear, accessories, and hard goods for young men, women, boys, and girls in the United States. Currently, the company operates through 238 stores across 33 states and online through tillys.com.
On December 2, Ed Thomas, the company’s President and CEO, said, "The fourth quarter is off to a strong start and, despite all of the challenges in the current environment, we remain optimistic about our business prospects for the remainder of fiscal 2021 and into fiscal 2022 at this time."
For its fiscal third quarter, ended October 30, 2021, TLYS’ net sales came in at $206.10 million, representing a 46.9% year-over-year rise. Its net income was $20.83 million, up 886% year-over-year. And its EPS increased 842.9% year-over-year to $0.66.
Analysts expect TLYS’ revenue to increase 47.5% year-over-year to $783.68 million in its fiscal year 2022. Its EPS is expected to increase 5,450% year-over-year in the current year to $2.14. It surpassed the EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 85% in price to close yesterday’s trading session at $15.78. Wall Street analysts expect the stock to hit $24.50 in the near term, which indicates a potential 55.3% upside.
It is no surprise that TLYS has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Momentum and Sentiment and a B grade for Growth and Value.
ANF shares were trading at $36.74 per share on Thursday morning, down $0.15 (-0.41%). Year-to-date, ANF has gained 80.45%, versus a 26.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.2 Apparel Retail Stocks That Wall Street Predicts Will Rally 35% or More appeared first on StockNews.com