Jim Cramer has highlighted six fashion and apparel stocks for investors seeking alternatives to the struggling AI trade: Ralph Lauren, Tapestry, Levi Strauss, VF Corp, Kontoor Brands and Reformation. He said consumer stocks have held up better than technology shares in recent weeks, and that falling interest rates could offer additional support to apparel companies ahead of the holiday shopping season.
The SPDR S&P Retail ETF rose 10% this quarter, while the Technology Select Sector SPDR Fund fell 11%, according to the report. Cramer described Ralph Lauren as his favorite apparel stock, citing continued growth across women’s clothing, accessories and outerwear, alongside a stronger international presence, particularly in Asia. The shares have recovered after falling in August and September, and he is optimistic ahead of the company’s earnings report on Thursday morning.
Tapestry, the parent company of Coach and Kate Spade, is also due to report on Thursday. Cramer pointed to Coach’s appeal in accessible luxury and its popularity among younger female consumers. However, Tapestry shares are down 20% since the company’s August earnings report, after its guidance disappointed investors. Cramer said he hopes the next report will mark the start of a recovery.
Levi Strauss is another potential turnaround pick. Its shares fell below $20 after disappointing results, but CEO Michelle Gass told Cramer the company had acted quickly to address shortages of popular styles. The stock has since gained more than 20% from its post-earnings low. Cramer said it still looks inexpensive at about 14 times earnings and noted its 2.8% dividend yield. He also sees the company as a way to benefit from broader strength in denim.
VF Corp, which owns The North Face, Vans and Timberland, has shown signs of improvement after several difficult years, particularly at Vans. Cramer cited positive findings from a recent Piper Sandler teen survey and a strong quarterly report as indications that the sneaker brand’s turnaround could be gaining traction. The shares have climbed about 14% since he recommended them roughly two weeks ago.
Kontoor Brands offers exposure to denim and a planned restructuring. The company intends to sell its Lee brand for up to $1 billion and focus on Wrangler and outdoor apparel maker Helly Hansen. Cramer expects the sale to be followed by significant share repurchases and believes the remaining businesses have room to grow. The shares trade at around 14 times earnings and yield close to 3%.
Cramer characterized Reformation as his more speculative choice. The women’s fashion company struggled after its late-July IPO, but he said it has strong growth, is profitable and offers a differentiated shopping experience supported by technology. After Cramer highlighted the stock in late September, it rose more than 31% in October.
Sources: CNBC Markets.