A return to the office will suit these retail and clothing stocks

I thought about fashion, which wasn’t supposed to happen. My plan at work has long been to stick to suits and dress shoes – a strategically indescribable and immediately forgettable mix of Brooks Brothers and Allen Edmonds – for a look in his own way that I can ride for a decade or so. of them.

On weekends, I feel like my wardrobe still holds up. It features LL Bean golf shirts and New Balance sneakers, an aging dad power combo best accessorized with loud moans while sneaking around patio furniture. But the pandemic has left me less sure of the costumes.

For over a year, professionals have been wearing fleeces below the Zoom range, and in some cases above. A tacit consensus seems to be forming around the mass return of urban workers to their offices around Labor Day. Suppose I go back to my costume and be the only one? I’ll stand out as a Times Square street performer, and without disrespecting Elmo or the cowboy in underwear, that’s not what I’m looking for. Again, what if I only dress to learn that everyone has a pent-up demand to dress?

Also, my dress pants are resistant to buttoning for now, but let’s not be distracted by the logistics.

JP Morgan expects apparel revenues in the United States to jump 21% this year from the depressed level of last year and to surpass more normal revenues by 6% seen in 2019. A recent Jefferies survey of women shows that over 60% say their wardrobes are outdated and they plan to do more shopping soon.

Clothing has been a deflationary commodity for decades, but in May prices rose 5.6% from a year ago, beating the headline inflation rate. Covid-19 has claimed thousands of clothing stores, leaving survivors more power over pricing. Blockages in the supply chain have increased shipping costs. Spinners and other textile players lack workers. Demand is exploding.

I’m starting to worry about a national pants race in August. But I don’t want buyers to panic, at least not until I have had a chance to place my orders. Whatever happens, the clothing industry is poised for solid profitability.

Among mass merchants, JP Morgan recommends actions of


Target

(ticker: TGT), which should benefit from fewer competing stores. Among brand owners, he likes


Nike

(NKE),


VF
Corp.

(


VF

This


Levi Strauss

(LEVI). Her choices for specialty stores include


American Eagle Outfitters

(AEO),


Boot Grange Holdings

(BOOT), and


Difference

(GPS). Even once we get past the “RTO,” as Wall Street calls our back-to-office time, stocks could remain meager ahead of the critical Christmas season.

Wells Fargo Securities analyst Ike Boruchow said investors should be careful to distinguish between successful stores and attractively priced stocks. For example, he is impressed by


Lululemon Athletica

(LULU), the mainstay of women’s yoga tights that makes men happy. “Full disclosure, I wore a lot of Lululemon to work before the pandemic,” says Boruchow, who highlights the $ 128 ABC stretch jeans and the company’s Commission chinos. “You put this on with a relaxed button-down shirt, and it’s kind of the new look of what used to be a suit and tie.” But he lowered his even-weight title rating from Overweight a year ago.

Boruchow likes the actions of


Ralph lauren

(RL), which has been hit hard by the pandemic and therefore has a lot to gain from a return to normal shopping habits. And he is optimistic


ThredUp

(TDUP), which collects and sells used clothing.

Don’t forget the accessories. Boruchow says sharp acceleration in online shopping during pandemic leaves handbag sellers


Tapestry

(TPR) and


Capri’s farms

(CPRI) well positioned. Clothing sellers would generally prefer buyers to do business in stores, where fixed costs are high and must be covered, rather than online, where the cost of fulfilling orders varies widely. But handbags are an exception. The prices are high enough to absorb the shipping cost and the return levels are low because sizing is not an issue.

I spoke with the chefs of two relatively young clothiers last week. Sarah LaFleur runs MM LaFleur, which sells women’s clothing and specializes in a look she calls power casual. Think chic but also stretchy and machine washable. The impetus came from the tech workers. “Their male counterparts may be wearing hoodies and jeans,” she says. “But that’s not what women wear. Yet if we wear a dress to work, other people think we are interviewing. Her best advice for the first day back to work: wear a size that fits you and be nice to yourself. “It’s a tough time for everyone,” she said.


Point correction

(SFIX) uses human stylists and artificial intelligence to select clothes for customers. The shares sell for $ 60, up from an initial public offering price of $ 15 in November 2017, making the company more than half the value of Gap.

“Consumers are looking for more guidance and more guidance right now,” said Stitch Fix president Elizabeth Spaulding, who will assume the role of CEO on August 1. “summer clothes” —suits, rompers and midi skirts, she said. For me, Spaulding recommended a house brand of stretch knit blazer called Artefact.

Speaking of artifacts, let’s get back to my costumes. I knew the weather was not on their side, of course, long before Brooks Brothers and Men’s Wearhouse filed for bankruptcy last year. A few years ago I visited the manager of a large bank in his office several years ago and he told me I sounded too corporate. Among dynamic chat room traders, “costumes” have become a disgrace. Now, I’m afraid we’re headed for costumes only on special occasions: weddings, funerals, Mark Zuckerberg reprimands by Congress.

Guess now I’m going to have to face more difficult decisions than wearing charcoal or navy with one of my eight identical shirts. Unless all you want is wanting to do one last labor day starch fight.

Corrections and amplifications

Stitch Fix president Elizabeth Spaulding said midi skirts have grown in popularity during the pandemic. An earlier version of this column incorrectly cited miniskirts.

Write to Jack Hough at [email protected] Follow him on Twitter and subscribe to his Barron’s Streetwise podcast.



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