I Believe This Clothing Company Should Be Worn in Your Portfolio
Just like fast food, I am well aware of clothing companies as I shop for clothes online and in person a lot throughout the year. I usually go for the clearance deals and try to capture bargains. On holidays and Black Friday I also pay attention to which stores are doing what and which ones are packed and which ones are not.
I'm going to break down clothing fashion for the teen-40 year range and say they can be broken up into 3 major groups: ANF, GPS, and the newly introduced to the stock market EXPR. Obviously there are other stores just as popular like AEO (American Eagle) and ARO (Aeropostale) but I will focus on 3 for this blog. Let me break down a little background of each store in basic terms:
ANF: Abercrombie & Fitch & Hollister. Similar to GPS, ANF is known as the Abercrombie style but also runs Hollister. Both stores are designed similarly with dark spaces showing a lot of teenager models and is supposed to attract the very thin and very spoiled sector of the clothing industry. Don't come here if you are any size greater than thin. Jeans often are thin or extra thin in size and the look is something most would wear from middle school up to college. A lot of the clothing seems extremely overpriced and carries the pre-rugged look. Hollister in particular has stores lit so dim that you wonder what they are trying not to show to us! $4.1 B market cap
GPS: Gap, Old Navy, Banana Republic, Piperlime, and Athleta. The mack daddy of clothing and has been for sometime. Each brand has its target audience. Several years ago, Gap was in. LL Cool J was popular and was a huge endorser of Gap clothing and specifically Gap jeans. Old Navy has catered to the less expensive crowd while Banana Republic tries to come off as a luxury type of clothing store with pants and shirts a lot more expensive than either Gap or Old Navy. Quality varies but not much has changed with either of the 3 main clothing lines. What I see today is very similar to what I saw 10 years ago. $12.6 B market cap
EXPR: Express. The newcomer to clothing as far as the stock market but definitely not new to the game. It was founded in 1980 in Ohio, just like ANF and GPS above. I guess in Ohio if they aren't going to produce a good NFL football team, they will produce good clothes? LOL! Anyways, EXPR is where its at I believe. I buy from them every couple of months. Why? Because they heavily push their advertising, their new products, and they keep things FRESH. What do I mean? Well compared to any clothing store for the teen-40 year old age group, it is clear the EXPR runs through a product cycle a lot quicker. They often have clearance on items recently introduced a few months earlier. They have a solid pricing structure that makes deals to customers while they still are able to keep their margins. In fact, their net profit margin rose by 1% in the 2nd to 3rd quarter comparison! For clothing that is a lot! In addition their return on average equity rose from 63% to over 800%! $1.4 B market cap
What does this say? Well let me say my experience. I used to shop at Gap & Old Navy, then I went to Banana Republic. Then I went to Aeropostale. I made a couple stops at Abercrombie until I saw my legs were too large for their jeans. Then I am in Express. Express offers new designs frequently throughout the year. Their fashion is fresh and that is why they are able to cycle through their products so quickly. Their prices are just right and they cater to a crowd other than the anorexic and extremely thin like Abercrombie does. And with a $1.4 B market cap, they have plenty of room to grow both as a company and in your portfolio if you choose to wear it.