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Reduced demand due to pandemic lockdowns and social distancing restrictions caused apparel sales to decline 19% year-over-year last year.

However, establishing a robust digital presence, introducing new fashion trends and comfortable apparel in sync with the changing consumer tastes, and expanding market reach have gradually enabled apparel retailers to rebound. The global apparel market is expected to grow at 7.5% CAGR to $797.30 billion by 2025.

Strong vaccination rates, declining jobless claims, and a consistent rise in consumer spending since August made the National Retail Federation (NRF) forecast holiday retail sales to rise between 8.5% -10.5% this holiday season.

Given this backdrop and the ongoing volatility in the market, fundamentally-sound and undervalued apparel stocks PVH Corp. (PVH), Hugo Boss AG (BOSSY), G-III Apparel Group, Ltd. (GIII), and Tilly’s, Inc. (TLYS) are expected to profit substantially this holiday season.

PVH Corp. (PVH)

PVH, formerly known as the Phillips-Van Heusen Corporation, operates as an apparel company that designs, markets, and retails men’s, women’s, and children’s apparel and accessories, fragrance, home bed and bath furnishings, and other products worldwide.

The company’s popular brands include Calvin Klein, Tommy Hilfiger, Van Heusen, Warner’s, Olga, True&Co., Izod, and Arrow. Its products are distributed wholesale in department, chain, specialty stores, independent retailers, concession locations, and digital commerce sites.

PVH’s total revenue for its fiscal third quarter, ended Oct. 31, 2021, increased 10.1% year-over-year to $2.33 billion. The company’s gross profit came in at $1.35 billion, indicating a 22.1% rise from the prior-year period. Its non-GAAP EBIT came in at $266.30 million.

While its non-GAAP net income increased to $192.10 million, its non-GAAP EPS increased to $2.67. As of Oct. 31, 2021, the company had $1.30 billion in cash and cash equivalents.

Analysts expect the stock’s EPS to increase to $8.79 in the current year. The consensus revenue estimate of $9.10 billion for the current year represents a 27.5% rise from the prior-year period. In addition, it surpassed Street EPS estimates in three of the trailing four quarters.

The stock has gained 4.2% year-to-date and closed Friday’s trading session at $97.74. PVH’s 8.02x trailing-12-month Price/Cash Flow is 32.9% lower than the 11.94x industry average. In terms of forward EV/EBITDA, PVH has been recently trading at 8.08x, 20.6% lower than the industry average of 10.18x.

PVH’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a B grade for Growth, Momentum, Value, Sentiment, and Quality. Click here to see the additional ratings for PVH’s Stability. PVH is ranked #6 of 63 stocks in the A-rated Fashion & Luxury industry.

Hugo Boss AG (BOSSY)

Based in Germany, BOSSY develops, markets, and distributes clothes, shoes, and accessories worldwide for men, women, and children. The company also offers licensed products, including fragrances, eyewear, and watches. It markets and sells its products under the BOSS and HUGO brand names through online stores, shop-in-shops, and factory outlets with approximately 7,350 sales points.

On Dec. 2, 2021, BOSSY opened a new BOSS store at Westfield Centro in Oberhausen, one of Germany’s largest and most successful shopping centers. The store offers sophisticated, modern collections for men and women from business, smart casual, and casual to athleisure, hosiery, and shoes and accessories. BOSSY expects to witness high demand in the coming months.

For its fiscal third quarter, ended Sept. 30, 2021, BOSSY’s sales increased to €755 million ($856.03 million). The company’s gross profit came in at €466 million ($528.36 million), up from the prior-year period. Its EBIT came in at €85 million ($96.37 million) for the quarter.

BOSSY’s net income of €54 million ($61.23 million) represents a rise from the prior-year period. Its EPS increased to €0.76. It had €113 million ($128.12 million) in cash and equivalents as of Sept. 30, 2021. Analysts expect BOSSY’s revenue to improve 31.9% year-over-year to $3.08 billion for the current year. It surpassed the consensus EPS estimates in three of the trailing four quarters.

The stock ended Friday’s trading session at $12.10. In terms of trailing-12-month Price/Cash Flow, BOSSY has been recently trading at 8.67x, 27.4% lower than the 11.94x industry average. In terms of forward EV/EBITDA, BOSSY has been recently trading at 8.32x, 18.3% lower than the industry average of 10.18x.

It is no surprise that BOSSY has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has an A grade for Growth and Quality, and a B grade for Value and Momentum. Click here to see the additional ratings for BOSSY (Stability and Sentiment). The stock is ranked #5 in the A-rated Fashion & Luxury industry.

G-III Apparel Group, Ltd. (GIII)

GIII designs, sources, and markets women’s and men’s apparel, athleisure and related accessories internationally. The company sells its products through department, specialty, and mass merchant retail stores and digital channels. As of Jan. 31, 2021, it operated 98 Vilebrequin retail stores, 50 Karl Lagerfeld Paris stores, and 13 DKNY stores.

On Sept. 30, 2021, GIII and Inter Parfums, Inc. (IPAR) entered into a long-term global licensing agreement to create, develop, and distribute fragrances and fragrance-related products under the iconic Donna Karan and DKNY brands.

GIII is looking forward to benefiting from IPAR’s impressive portfolio of fragrance brands, extensive worldwide distribution capabilities, and customer base. Both companies are also planning to launch new fragrances under these brands in 2023.

GIII’s net sales for its fiscal third quarter, ended Oct. 31, 2021, increased 22.8% year-over-year to $1.02 billion. The company’s gross profit came in at $347.51 million, indicating a 16.7% rise from the year-ago period. Its operating profit came in at $158.13 million. GIII’s net income came in at $106.67 million for the quarter. Its EPS increased to $2.16. The company had $279.56 million in cash and cash equivalents as of Oct. 31, 2021.

Analysts expect the stock’s EPS to grow to $3.72 in the current year. The consensus revenue estimate of $2.76 billion for the current year represents a 34.2% rise from the prior-year period. In addition, it surpassed Street EPS estimates in each of the trailing four quarters.

The stock has gained 9.1% year-to-date and closed Friday’s trading session at $26.29. GIII’s 6.98x trailing-12-month Price/Cash Flow is 41.6% lower than the 11.94x industry average. In terms of forward EV/EBITDA, GIII has been recently trading at 5.28x, 48.1% lower than the industry average of 10.18x. GIII’s levered free cash flow grew at a CAGR of 5.7% over the past three years.

GIII’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The stock has an A grade for Value, and a B grade for Growth and Momentum. Click here to see the additional ratings for GIII (Stability, Sentiment, and Quality). GIII is ranked #15 of 37 stocks in the B-rated Athletics & Recreation industry.

Tilly’s, Inc. (TLYS)

TLYS is a specialty retailer of casual apparel, footwear, accessories, and hard goods for young men, women, and children. The company also provides a third-party merchandise assortment across its various product categories and sells its merchandise through its e-commerce website.

TLYS’ net sales for its fiscal third quarter, ended Oct. 30, 2021, increased to $206.10 million. The company’s gross profit came in at $76.74 million. Its operating income came in at $29 million for the quarter. While its net income increased to $20.83 million, its EPS increased to $0.66. The company had $59.39 million in cash and cash equivalents as of Oct. 30, 2021.

Analysts expect TLYS’ EPS to rise to $2.14 in the current year. The consensus revenue estimate of $783.68 million for the current year represents a rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters. TLYS’ EPS is expected to grow at a rate of 12% per annum over the next five years.

The stock ended Friday’s trading session at $14.59. In terms of trailing-12-month Price/Cash Flow, TLYS has been recently trading at 6.96x, 41.2% lower than the 11.83x industry average. In terms of forward EV/EBITDA, TLYS has been recently trading at 5.33x, which is lower than the industry average of 10.33x.

TLYS’ POWR Ratings reflect its solid prospects. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. TLYS has an A grade for Sentiment and Momentum, and a B grade for Value and Growth. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for TLYS’ Sentiment and Stability here. TLYS is ranked #8 of 63 stocks in the A-rated Fashion & Luxury industry.