The 2021 Apparel Top 50

Consumers continued to grapple with an altered way of life over the past year, echoed in this year’s Apparel Top 50. The annual ranking, produced by RIS and research partner wRatings, compares publicly traded apparel companies with at least $100 million in sales by largest profit margin. This year, apparel trends reflected in the list showcase a worldwide cultural shift. The list examines economic data for the trailing 12 months (TTM) prior to September 24th, 2021 — a historic period forever marked by the coronavirus pandemic. The top retailer on the list this year exemplifies the global impact this period has had on the apparel industry. The Apparel Top 50’s No. 1 retailer Crocs launched in 2002 and its iconic shoes for women, men, and children have now been sold in more than 90 countries. Known for comfort, most Crocs contain a proprietary, molded footwear technology dubbed Croslite material. UK retailer John Lewis named Crocs a “product that defined the year” in October. The footwear retailer’s shoes were among the products that defined the last 12 months (up 58%), according to John Lewis’ “Shop, Live, Look” report, which reflected that UK consumers adapted to lockdown by seeking comfort, a broader trend seen across the apparel industry. In addition to meeting current consumer trends, technology plays an instrumental role in delivering engaging and efficient experiences to Crocs’ consumers, while also helping the retailer better understand its customers. “Crocs now has a unified retail platform that allows us to gather deeper insights, enabling the brand to serve our consumers better, deliver the right products to the right stores at the right time, and operate our business in a more profitable, data-driven manner,” said Doug Goehl, VP, global retail IT and people systems for Crocs. Crocs has also strategically prioritized a digital-led route to market as a key pillar for global growth, said Michelle Connors, Crocs e-commerce product operations manager. “Part of that means creating positive online experiences that keep consumers engaged throughout their journey, from the homepage to checkout.” Its digital sales grew 69%, achieving double-digit growth in all regions, and representing 37% of total revenues in its most recent quarter (Q3 2021). Retailers across all verticals that were able to capture and inspire consumers digitally fared well during this historic moment in time. Nike, No. 7 on the list (and notably No. 1 for sales), is another prime example of a retailer that dominated customer engagement through technology during the pandemic. The footwear giant now has more than 300 million Nike members and popular mobile apps that provide its shoppers with content, community and commerce. While Nike held steady on the list from last year, five companies skyrocketed upward more than 20 spots since 2020: Gildan Activewear; Guess?; Capri Holdings; Dillard's; and Abercrombie & Fitch. Most notably, Gildan Activewear — a manufacturer of everyday basic apparel — rose 22 spots to take the No. 5 position this year. While many companies gained profitability, The Apparel Top 50 also saw some notable declines in profit margin. Luxury outerwear retailer Canada Goose slid from No. 1 in 2020 to No. 18 this year. While its sales weren’t far off, its net income dropped from $131.6 to $74.8 million. Ralph Lauren suffered the steepest decline, slipping 30 spots from No. 16 to No. 46 this year, but that doesn’t tell the whole story. It also boosted sales $10.1 billion. "Our timeless brand is resonating strongly with consumers around the world, and the breadth of our lifestyle portfolio is enabling us to deliver products that meet evolving consumer tastes and demand as we progressively emerge from the pandemic,” said CEO Patrice Louvet. “Even as we continued to manage through COVID-related challenges in select markets and in our global supply chain, we are back on offense and excited about our future growth opportunities."

Only two types of apparel companies exist: Those that compete and those that dominate. Being good wins you customers. Being great wins you more customers. But when you dominate in your industry, you get to make the rules for how to win. What does being dominate mean? You must be divergent. In the past, some have called this being “unique” or finding ways to “differentiate” yourself. But divergent is substantially more powerful. You must find ways that change how the game gets played. In turn, this creates a new set of rules that forces your competitors to adapt. Most companies rely on their core offerings (products or services) to showcase how unique they are. This is always smart. It’s just not enough. To find the apparel companies on their way to dominating, take a look at two in the top 10 this year: Crocs and Zumiez. Over the past three years, their ranks in net income have improved from 33->5->1 and 34->11->8, respectively. Those are substantial jumps compared to their peers. What’s more interesting is that they are dominating in their own ways and on their own paths, which are essential to being divergent. The workplace culture at Crocs has generated a new wave of competitive strength that extends their brand meaning in innovative ways (think word of mouth). With their one-channel approach, Zumiez has simplified the customer experience to make orders and delivery seamless.

Compete or Dominate

By Gary A. Williams Founder & CEO, wRatings Co-Managing Partner, G2 Equity Partners

Divergent thinking. Divergent execution. New rules that rivals must follow.

The Apparel Top 10 Retailers

Crocs skyrockets to this year’s No. 1 spot on The Apparel Top 50, after finishing No. 5 in 2020 and No. 33 in 2019. While the footwear retailer ranks just 34th place for sales out of the companies on the chart, its profit margin is 35.4%. This significant number is 16.9 percentage points higher than the No. 2 retailer on the list. The international brand born in 2002 has sold more than 720 million pairs of shoes in more than 90 countries around the world to date. Its sales TTM of $1.87 billion make it one of the world’s 10 largest non-athletic footwear brands. Crocs shoes feature Croslite material, a proprietary technology that gives each pair of shoes the soft, lightweight, odor-resistant qualities the brand is known for. This year the retailer also committed to net zero emissions by 2030. Crocs plans to achieve this by transitioning to sustainable ingredients, minimizing packaging, responsible resource use, and exploring innovative product afterlife solutions. “I believe we can deliver sustained, highly profitable growth while having a positive impact on our planet and our communities,” said CEO Andrew Rees.

Profit margin: 35.4% 2020 profit margin rank: 5

The denim-focused retailer has been a steady staple at the top of these rankings for many years, but this year its sales ($1.16 billion) and net income ($215.9 million) both jumped from 2020. It’s one of the smaller operations on the list (sales rank No. 41), but the steady denim destination has grown in its 50-plus year history, operating 442 retail stores in 42 states currently. Based out of Kearney, NE, The Buckle caters to fashion-conscious young men and women, offering both brand names and private label casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear. The retailer boasts personalized attention to its customers and services such as free alterations, layaways, and a frequent shopper program. It also has an intensifying online business: It reported in August online sales for the year-to-date period were up 24.5% compared to the same 26-week fiscal period in 2020, and up 104.5% compared to the same period in 2019.

Profit margin: 18.5% 2020 profit margin rank: 4

At first glance, one might think they haven’t heard of Deckers Outdoor, which does business as Deckers Brands. But the company's portfolio includes the well-known brands of UGG, Koolaburra, Teva, HOKA ONE ONE, and Sanuk. The footwear, apparel and accessories retailer had $2.77 billion in income and sells its products in more than 50 countries and territories through company-owned and operated retail stores, in department and specialty stores, and online. In 2020, when the company had to pivot to a world where its agents were working from home, it overhauled its tech to omni-serve customers. The company launched a new CRM meeting a six-week timeline goal. In under a year, it met milestones such as: introducing SMS, integrating into its order management system, reducing contacts as percent of orders, and piloting its UGG flagship store. “Through technology, data, and some key features, we’ve been able to improve service levels and create a dramatically different customer experience,” Bryan Riter, customer care director, Deckers, told RIS. The brand improved customer satisfaction 5%, putting it to a 91% across 97,000 customer responses for 2020.

Profit margin: 15.9% 2020 profit margin rank: 3

While lululemon athletica dropped from No. 2 on this list to No. 4, both its gross sales and profit are growing. Sales are up $1.66 billion and profit is up $317.9 million in the year-ago period. “Our approach continues to be grounded in prudently managing our expenses while also continuing to strategically invest in our long-term growth opportunities,” CFO Meghan Frank said in September. The athletic apparel company for yoga, running, training, and most other sweaty pursuits, was able to turn physical shoppers into digital shoppers during the pandemic. Even as its stores reopened, it “continued to see historically retail-only guests now shopping with us online,” Celeste Burgoyne, president, Americas and global guest innovation, said in December. It launched appointment shopping, a digital education program, curbside pickup, and mobile POS. Lululemon also acquired MIRROR in July 2020 and spent the last year building up MIRROR’s in-store presence to almost 200 lululemon locations in North America. Looking ahead it announced in October MIRROR will be offered in nearly 40 lululemon stores across Canada, helping to propel lululemon’s vision to strengthen its community connection through the platform.

Profit margin: 15.5% 2020 profit margin rank: 2

Gildan Activewear regained its top 10 placement this year, shooting up 22 places from 2020, to No. 5 with $2.63 billion in sales. It stood at No. 4 in 2019. Gildan, perhaps best known for American Apparel, which it purchased at auction for $88 million in 2017, manufacturers everyday basic apparel under a portfolio of company-owned brands and under the Under Armour brand through a sock licensing agreement providing exclusive distribution rights in the United States and Canada. Its apparel offering spans activewear, underwear, socks, hosiery, and legwear products sold to a range of customers, including wholesale distributors and screen printers, as well as to retailers and global lifestyle brand companies. The company attributes much of its success to being a vertical enterprise, with control over its supply chain. Earlier this year it launched a new website for its print wear brands — Gildan, American Apparel, Comfort Colors, Anvil by Gildan, Alstyle, and Prim + Preux — streamlining access to product information and consolidating its apparel brand websites into a single, full-service, platform.

Profit margin: 14.4% 2020 profit margin rank: 27

Revolve Group has the lowest sales in the top 10, at $699.3 million — placing it at No. 46 on the list for sales — but it’s profit of $92.2 million boosts it to No. 5 here. Revolve Group calls itself the “next-generation fashion retailer for Millennial and Generation Z consumers.” The premium lifestyle brand offers a vast yet curated apparel offering and sells its merchandise through two complementary segments that leverage one platform, REVOLVE and FORWARD. Through REVOLVE, the retailer offers premium apparel and footwear, accessories, and beauty products from emerging established and owned brands. Through FORWARD, shoppers find a highly curated assortment of iconic and emerging luxury brands. Co-founder and co-CEO Mike Karanikolas said a powerful driver of its Q2 2021 top-line growth was the further acceleration of growth within its FORWARD segment, which grew more than 150% year over year and 120% over the second quarter of 2019, underscoring the brand’s strong and expanding relationship with the next generation consumer. In September, FORWARD named Kendall Jenner its new creative director, in charge of the look and feel of the website, curation of brands, monthly edits of must-have trends, and brand partnerships.

Profit margin: 13.2% 2020 profit margin rank: 13

Nike remains flat from 2020 at No. 7 this year for profit margin and still No. 1 for sales at $46.19 billion. Its owned digital business has more than doubled over the past two years, with its suite of apps reflecting more than 40% of this. In its most recent quarter, the footwear and apparel retailer’s branded digital sales grew 29% — to represent a 26% share of the business. Nike’s digital growth is led by its SNKRS app, which it uses as its intersection of content, community and commerce, according to president and CEO John Donohoe, offering new content or product launches on a near-daily basis. Membership has also proven to be a driver of repeat engagement and buying across digital and physical retail, he said — it now has more than 300 million Nike members. To propel the strategy, the company is enhancing membership, including introducing a new launch experience that was exclusive to its SNKRS app for the Off-White Dunk. As part of this, Nike delivered personalized purchase offers to members based on their engagement with SNKRS past purchase attempts, as well as other criteria, leveraging data science to drive digital member targeting.

Profit margin: 13.2% 2020 profit margin rank: 7

Specialty retailer Zumiez, which sells apparel, footwear, accessories and hardgoods, nudged its way into the top 10 this year, up from No. 11. The retailer targets young men and women who want to express their individuality through fashion, music, art and culture of action sports, streetwear, and other unique lifestyles. Operating 727 stores as of August — across the U.S., Canada, Europe and Australia — under the names Zumiez, Blue Tomato and Fast Times, the retailer attributes its accomplishments to its one-channel approach. “Key to our success has been and will continue to be our one-channel mentality and our proven ability to adapt to changing consumer needs… We've morphed our business into a channel-less organization, with inventory visibility from all touchpoints and back-end capabilities that allow us to effectively leverage expenses regardless of the channel in which sales originate,” CEO Rick Brooks said in September. Zumiez’ sales increased 41% to hit $547.7 million for the 26 weeks ended July 31, 2021, compared to the same period in 2020. The brand’s profitability is also quickly climbing as it exits the early months of the pandemic — net income for the first six months of 2021 was $50.4 million compared to $4.3 million for the first six months of fiscal 2020.

Profit margin: 10.6% 2020 profit margin rank: 11

RICK BROOKS CEO, Zumiez

"Stronger than expected full priced selling helped offset a portion of expenses that were reintroduced following temporary cost savings last year during the height of the pandemic, resulting in second quarter profitability that meaningfully exceeded our projections."

RAFFAEL SARRACINI VP of IT and E-Commerce, Gildan

“From a digital standpoint, we’ve also included many new AI-powered tools to help our team consistently optimize and update the website to our customers’ needs.”

ANDREW REES CEO, Crocs

“[Crocs’] results and the confidence we have in our long-term vision are due to our dedicated and talented colleagues who bring the Crocs brand to life every day.”

Carter's reached $352.5 million in net income and $3.39 billion in sales, bringing it to the No. 9 spot. The children’s apparel retailer achieved record levels of sales and earnings in its Q2 2021, benefiting from store reopenings, progress with vaccinations, and easing of pandemic-related restrictions. “Our performance meaningfully exceeded our expectations and was driven, we believe, by the strength of our product offerings, more effective marketing, leaner inventories, and improved price realization,” said CEO Michael D. Casey. Carter’s strengthened its e-commerce capabilities during the pandemic last year to “improve the experience for its high-margin online customers,” including curbside pickup, same-day pickup and ship-from-store capabilities, he said. It also launched a new mobile app and invested in RFID capabilities that Casey believes will improve inventory accuracy, sell-throughs and margins moving forward (it’s currently implementing an RFID technology solution in its U.S. stores). “The collective benefit of fewer better product choices, fewer better higher-margin stores, a better mix of high-margin e-commerce customers, leaner inventories, and fewer and better promotions, drove a meaningful improvement in price realization and profitability in the second quarter and first half this year,” he said.

Profit margin: 10.4% 2020 profit margin rank: 12

Boot Barn, a retailer of western fashion and work-related footwear, apparel and accessories for men, women and children, jumped into the top 10 from No. 15 last year and No. 29 in 2019. The company, which has grown to over a billion dollars in sales, has successfully transformed from simply a footwear retailer to a lifestyle brand. It operates 276 stores in 36 states, in addition to www.bootbarn.com; pure play online western and work retailer www.sheplers.com; and www.countryoutfitter.com, an e-commerce site selling to customers who live a country lifestyle. Over the past two years the retailer has implemented BOPIS, curbside pickup, same-day delivery, and buy-online-return-in-store. “Upgrading and modernizing the brand has played a critical role in enabling us to become more relevant to more customers that are immediately adjacent to our original core customer that may have been unlikely to shop in a pure Western retail store,” said CEO James G. Conroy. To ensure it would be relevant to both existing and new customers, the company created a well-defined customer segmentation strategy.

Profit margin: 9.6% 2020 profit margin rank: 15

JAMES G. CONROY CEO, Boot Barn

“We speak to our more than four million active customers with email, direct mail and digital communications that are tailored to them based on their demographics, and purchase history.”

THE APPAREL TOP 50 LIST

The Apparel Top 50 Report is an annual ranking of the apparel companies by largest profit margin, with at least $100 million in sales that trade on the U.S. stock exchange. RIS teams up with research partner wRatings, a financial analyst firm headed by founder and CEO Gary Williams, to take a comprehensive look at the top apparel retailers. The financial metrics of more than 50 publicly traded retailers were examined to produce the list. The economic data comes from the 12-month period ending on September 24, 2021. The companies were ranked on profit margin from this time.

Methodology

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