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James Li
James Li
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5 Apparel and Footwear Manufacturing Companies Gurus Agree On

Gurus celebrate the 100th season of the NFL and a day of American patriotism

September 11, 2019 | About:

In light of the National Football League’s 100th season and a day of American patriotism, the most-broadly-held apparel and footwear companies according to the Aggregated Portfolio are Nike Inc. (NYSE:NKE), PVH Corp. (NYSE:PVH), Ralph Lauren Corp. (NYSE:RL), VF Corp. (NYSE:VFC) and Foot Locker Inc. (NYSE:FL).

The NFL kicked off its 100th season on Sept. 5, with the Green Bay Packers defeating the Chicago Bears 10-3 in the kickoff game. On Sunday, Super Bowl champions the New England Patriots revealed their championship banner on “Sunday Night Football.” Then on Wednesday, Americans celebrated a day of remembrance and patriotism on the 18th anniversary of the 9/11 attacks.

Manufacturing industry overview

The Manufacturing – Apparel & Furniture industry includes companies that engage in the manufacturing of apparel goods or home furnishing products. Apparel manufacturing includes subindustries like clothing, footwear and accessories.

Companies in the manufacturing sector are sensitive to changes in the business cycle: During market downturns, manufacturing companies can lose revenue as consumers reduce nonessential expenses. Additionally, the manufacturing sector is highly competitive as companies compete on brand recognition, product quality and price.

Nike

Seventeen gurus have positions in Nike with a combined weight of 11.41%. Gurus with large holdings include Spiros Segalas (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

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The Beaverton, Oregon-based sports giant sells athletic footwear and apparel items to over 50,000 retail accounts through a network of over 1,142 company-owned stores, independent distributors and licensees in over 170 countries. GuruFocus ranks Nike’s profitability 8 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7 and returns on equity that outperform 96.23% of global competitors. Additionally, Nike’s business predictability ranks five stars on strong and consistent revenue and earnings growth over the past five years.

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Although Nike has strong and predictable earnings, GuruFocus warns the operating margins have declined approximately 2.1% per year over the past five years and are outperforming just 70% of global competitors.

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Managers of the Parnassus Fund, one of several funds overseen by Jerome Dodson (Trades, Portfolio), said in their second-quarter shareholder letter that they purchased shares of Nike, a company that executing on its “Triple Play” strategy to double innovation, speed to market and direct connections to consumers. The fund managers said they are excited to invest behind Nike given its strong brand and long-term growth potential from emerging markets.

PVH

Fourteen gurus own shares of PVH with a combined weight of 4.09%. Ray Dalio (Trades, Portfolio)’s Bridgewater Associates owns 517,571 shares as of quarter-end, up 83.93% from the first quarter.

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The New York-based company manufactures apparel items through brands like Tommy Hilfiger and Calvin Klein. GuruFocus ranks PVH’s profitability 7 out of 10 on several positive signs, which include expanding profit margins and consistent revenue growth. GuruFocus gives PVH the business predictability rank of three stars.

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Ralph Lauren

Twelve gurus own shares of Ralph Lauren with a combined weight of 1.16%. Bridgewater owns 191,690 shares as of quarter-end.

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The New York-based company designs and manufactures a wide range of apparel and accessories through brands like Polo and Polo Sport. GuruFocus ranks Ralph Lauren’s financial strength and profitability 6 out of 10: Even though the company’s revenues have declined approximately 2% per year over the past five years, it has a strong Piotroski F-score of 7 and a strong Altman Z-score of 3.66.

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VF Corp

Twelve gurus own shares of VF Corp. with a combined weight of 1.97%.

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The Greensboro, North Carolina-based company manufactures apparel and footwear items through brands like The North Face, Timberland and Vans. GuruFocus ranks VF’s financial strength and profitability 6 out of 10: Even though the company’s debt-to-equity ratio underperforms 71% of global competitors, it has a solid Piotroski F-score of 6 and a strong Altman Z-score of 5.57. Additionally, operating margins are outperforming 69.07% of global competitors despite contracting approximately 6.5% per year on average over the past five years.

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Foot Locker

Eleven gurus own shares of Foot Locker with a combined weight of 0.73%.

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The New York-based footwear manufacturer operates thousands of stores around the globe, primarily selling athletically inspired shoes and apparel. GuruFocus ranks Foot Locker’s profitability 7 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7 and consistent revenue growth. Despite this, operating margins have declined while Foot Locker’s three-year revenue growth outperforms just 51% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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