St. Patrick's Day Sale
Don’t look now, but some of the Canadian apparel plays have been picking up some serious traction. Undoubtedly, the appetite for fashionable consumer discretionary items has been rather mixed over the past several years. And while the hot performers of the past year have been on quite the wild ride since the post-lockdown spending spree (remember the so-called roaring 2021 environment?), I think that the retail scene has mostly been about haves and have-nots.
Undoubtedly, American sportswear icon Nike (NYSE:NKE) has suffered such a profound fall from grace. Indeed, for such a cherished brand, it’s quite shocking to learn the stock is down close to 60% from its all-time high. And as shares look to gain in negative momentum, questions linger as to how the renowned firm can endure such a gargantuan fall from grace.
Move over Nike; there are other clothing brands surging on the scene
While the economic environment, high inflation, and management’s lack of innovation (it is worth noting the firm changed chief executive officers recently to spark positive change) can be partly to blame, I think that competition in the space is a major reason why Nike is fresh off one of the worst declines in its history. Indeed, we live in an era where new brands are being propelled by leaps and bounds via social media.
Not to knock Nike’s social media marketing campaign, but it certainly seems like rivals have had the upper hand lately. At the end of the day, fashion remains a pretty tough place to be as an incumbent.
That’s why I’m a big fan of up-and-comers with significant momentum behind them and other low-cost producers who can defend their market share. If investing in clothing stocks is too complex, don’t feel the need to enter the space. After all, you shouldn’t invest in what you do not know. However, if you have first-hand experience with any of the following brands, perhaps it may make sense to place a bet as they fly high in 2025, as other clothing retail plays continue to sag.
Aritizia
First, we have popular Canadian women’s clothing retail Aritzia (TSX:ATZ), which came back in fashion in a big way last year, with shares soaring over 81%. Indeed, I don’t think the home-grown retailer is about to slow down anytime soon, especially as the company doubles down on its U.S. expansion. Some remarkable (though early) small successes have been seen south of the border. And I think there’s room for more aggression on the still relatively untapped market.
If Trump tariffs aren’t applied, perhaps Aritzia can get “floor it” to level up its growth profile. Either way, the $7.95 billion company has ample market share to take if it can keep staying fashionable with its target audience. Combined with a solid social media and e-commerce presence, I think a stage is set for continued outperformance over the next three years.
On Holding
Another disruptor in fashion is Swiss shoemaker On Holding (NYSE:ONON), which is likely a major contributor to Nike’s pains in recent years. Just look at the stock’s past-year gains—it’s surged 97%. Over the past two years, shares have rocketed to a more than 163% gain. As one of the fastest-growing athletic brands on Earth, Canadian investors may wish to give the name a look if they believe in the brand and its potential to keep on taking share away from the giants. With a $19.3 billion market cap, there’s still room to run. However, investors should insist on getting in at a price that’s reasonable.
