Twice a year, fashion designers and industry experts from around the world converge for runway shows in New York, London, Paris and Milan to show off and take in the newest looks for the spring and fall. This year’s ready-to-wear fall collections will debut when New York Fashion Week officially kicks off Feb. 9.
But how do you trade the sector?
Over the past couple of months, the “Fast Money” traders weighed in on companies that stood out — some of them among the top S&P 500 performers. The following names span the spectrum from apparel to footwear, accessories to fragrances, and looked strong heading into the runway shows.
By Bruno Navarro
Posted Feb 9 2012
“This is an exciting story,” Karen Finerman, president of Metropolitan Capital Advisors and “Fast Money” contributor, said after Michael Kors Holdings held its initial public offering in December."I’m a buyer. Yes, it’s expensive on current earnings, but this a growth story. I’d think it would be a high teens multiple. I’m looking for the stock to trade up to the mid-to-high $20s.”
Helmed by “Project Runway” judge and Chief Creative Officer Michael Kors, Michael Kors Holdings operates in retail, wholesale and licensing from its Hong Kong headquarters. The company produces footwear, fragrances, eyewear, apparel and accessories. It has a market cap of $5.97 billion.
“This stock has been on fire,” Patty Edwards, “Fast Money” retail expert, said after the stock was named the No. 16 top-performing stockin the S&P 500 for 2011, up nearly 37 percent for the year. Additionally, the stock posted a 46 percent year-over-year increase at the beginning of February.
The New York-based company owns a number of well-known brands in the cosmetics, skincare and fragrance space, including MAC, Origins, Clinique, Bobbi Brown and Aveda. It also makes products under license for such companies as Tommy Hilfiger, Donna Karan, Sean John and Coach, adding Ermenegildo Zegna to its roster in June 2011. It has a market cap of $22.67 billion.
Edwards, who is also chief investment officer at Trutina Financial, likes The TJX Cos., calling it “one of the best operators in the business, who creates very fashionable profits from the items that other stores just can’t convince shoppers will make pretty outfits.”
The company, based in Framingham, Mass., operates off-price retail stores T.J. Maxx and Marshalls, as well as HomeGoods and A.J. Wright, in the U.S., Canada and Europe. It was also theNo. 12 top-performing S&P stockin 2011, and has a market capitalization of $25.75 billion.
“For a longer-term choice, there’s no retailer more fashion-forward than Nordstrom,” Edwards said. “They already have some of the best merchants in the business and are now redefining their rewards program and department alignments to drive already strong comps. This is not your grandmother’s department store.”
The Seattle-based fashion specialty retailer carries high-end names among its lines of clothing, shoes, cosmetics and accessories. It also owns off-price retailer Nordstrom Rack and Jeffrey boutiques, as well as a credit division. It has a market cap of $10.37 billion.
Joe Terranova, Virtus chief market strategist and “Fast Money” contributor, says he likes PVH Corp. for its “U.S.-centric theme.”
“I think that’s the play in the high-end retail space,” he said recently.
The New York-based company, previously known as Phillips-Van Heusen, owns some of the best-known names in the fashion space, including Calvin Klein, Izod, Geoffrey Beene, DKNY, Tommy Hilfiger, Ted Baker, Jones New York, Kenneth Cole Reaction, Nautica and several private-label brands. It has a market cap of $5.17 billion.
“You want to talk about a global brand. They’re in China, Europe, South America. They’re everywhere,” said “Fast Money” contributor Steve Grasso of Stuart Frankel.
Ralph Lauren produces and sells a broad range of apparel and accessories for men, women and children, as well as home products, such as paint, furniture and wallpaper, through its wholesale and retail businesses. The company saw its stock price soar more than 30 percent to become the No. 25 top-performing S&P 500 stock in 2011. It has a market cap of $14.18 billion.
The maker of Wrangler Jeans, Timberland and Vans brands experienced a stellar 2011. With its stock price rising 47 percent, it checked in as the No. 9 top-performing S&P 500 stock.
Based in Greenboro, N.C., VF Corp. markets its apparel and footwear brands via department and specialty stores, as well as internationally through licensees. It has a market cap of $14.34 billion.
Another favorite of Terranova, True Religion Apparel saw an 80 percent year-over-year increase in its stock price as of early February.
The company, headquartered in Vernon, Calif., was founded in 2002 by industry veteran and jeans aficionado Jeffrey Lubell on the principles of quality, American-made denim. Its products are sold in stores in six continents, as well as in 125 standalone stores. It went public in 2003 and has a market cap of nearly $925.7 million.