LikeFolio data is confirming that the much-anticipated “reopening” surge in economic activity has arrived.
We are seeing consumer demand return to a variety of sectors (travel, dining, and indoor recreation, to name a few), and apparel has been leading the charge as consumers look to update their wardrobe for a return to normal activities.
Consumer Mentions of buying new clothes or updating their wardrobe have gained +11% YoY (30-day moving average) and are just off of all-time record highs.
Clothes shopping has been ignited as things return to normal in the U.S.
And the desire to update wardrobes has translated to near-term demand growth for a variety of apparel retailers:
When I look at the Outlier Discovery Chart above, the first thing that sticks out to me is that there aren’t any fashion retailers in the Outlier Zone… that magical area at the top right of the chart where we find some of our biggest potential long-term winning stocks.
But there is still a lot to be learned from this view. By digging into the brands on the chart, we can start to form a “portfolio of ideas” in the sector… and have a huge head start on discovering tomorrow’s opportunities:
- American Eagle (AEO) is experiencing a strong surge in Purchase Intent due to rising Demand for Denim. Demand growth for Aerie is slowing, but the brand maintains an incredibly high level of happiness: >90% positive.
- Abercrombie (ANF) shows continued strength after a strong Holiday quarter, so this is one to keep an eye on.
- Old Navy (GPS) is outperforming The Gap in terms of Demand growth and volume. This is nothing new, as the company had plans to spin off Old Navy as recently as last year. Athleta Purchase Intent Mentions have not maintained the explosive growth seen last year, but Consumer Happiness remains incredibly high.
- Lululemon (LULU) is suffering a slowdown as consumers prioritize comfort less than they did when they were stuck at home.
Bottom line: Apparel is booming as consumers get back out on the town, but we’re still waiting for clear winners (or losers) to emerge in the space.