Welcome to Extreme Investor Network, where we bring you the latest insights and trends in the world of investing. Today, we’re diving into the exciting resurgence of Western styles and how it can impact denim stocks in the market.
According to TD Cowen analyst Oliver Chen, the jean-fabric category is set to experience a significant uptick in performance, with momentum expected to continue through at least the end of 2024. Chen specifically pointed out key players in the denim space, including Boot Barn, Levi Strauss, and Ralph Lauren, as prime opportunities to capitalize on this trend.
The resurgence of Western fashion has been gaining traction, thanks to its association with music icons and recent cultural influences like Taylor Swift’s Eras tour and Beyoncé’s “Cowboy Carter” album. Consumers are showing a renewed interest in head-to-toe denim dressing and artisanal garments, driving higher spending in the denim category.
For investors looking to play the denim revival, Levi Strauss and Ralph Lauren present compelling opportunities. Ralph Lauren has seen significant growth in average unit revenue and gross margins, with a strong Americana and Western heritage that appeals to U.S. consumers. Meanwhile, Levi Strauss’s direct-to-consumer premiumization efforts have positioned the brand at the forefront of cultural relevance.
Boot Barn, while also benefiting from the Western wear trend, is experiencing a boost in same-store sales growth. CEO James Conroy noted the increased interest in Western styles but emphasized that Beyoncé’s influence is just a “fringe piece” of their customer base. Despite exceeding earnings and revenue expectations in the fourth quarter, Boot Barn provided a mixed outlook for fiscal year 2025.
As these denim stocks continue to outperform the market, analysts have varying opinions on their future prospects. While Ralph Lauren is expected to see upside potential, Levi Strauss may face a slight pullback in the near term. Boot Barn’s performance remains strong, with shares soaring almost 40% since the beginning of 2024.
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