The movie Barbie is a global hit. Just one week after its release, the film has grossed nearly $500 million worldwide, including $214 million at the North American box office. The movie about the iconic Barbie and Ken dolls made by toy company Mattel (NASDAQ:MAT) has struck a chord with audiences and is helping to revive box office fortunes that were devastated during the Covid-19 pandemic. The domestic box office that includes the U.S. and Canada generated $1.8 billion of sales in the first three months of this year, which was 25% below pre-pandemic 2019 levels. Box office distributors and film studios are hoping Barbie can lead to higher grosses throughout the remainder of summer.
However, it is not just the box office where Barbie is having an impact. Many other economic sectors are getting a boost, notably the fashion industry as people dress up like Barbie and Ken to attend screenings of the film. Here are three fashion stocks worth buying for the Barbie boost.
Ralph Lauren (RL)
Barbie and Ken are preppy fashion icons, and there is no company more associated with the preppy look than Ralph Lauren (NYSE:RL). The company that popularized the polo shirt has been on a tear lately, with its stock up 35% over the last 12 months — including an 18% gain in 2023. With consumer spending holding strong, especially among affluent Americans, it has benefitted Ralph Lauren. At the end of May, the company posted an impressive first-quarter earnings beat.
The fashion retailer announced Q1 earnings per share of 90 cents, which beat consensus forecasts of 65 cents. Revenue in the quarter came in at $1.54 billion, which was better than the $1.52 billion that had been expected on Wall Street. Ralph Lauren also boasts a strong balance sheet, with $1.5 billion of cash and only $1.1 billion of long-term debt at the end of March. Trading at 16 times forward earnings, RL stock looks reasonably valued. And, the stock pays a quarterly dividend of 75 cents a share, which is good for a yield of 2.34%.
Lululemon Athletica (LULU)
Both Ken and Barbie like to stay fit and hang out at the beach. And what better wardrobe for those activities than Lululemon Athletica (NASDAQ:LULU)? The athletic apparel retailer that caused a sensation with its yoga pants and other workout gear has seen its stock perform strongly over many years. LULU shares have increased 16% this year, 27% in the last 12 months, and 213% over five years. The company continues to ride the enduring popularity of its athletic wear to new heights.
The company’s latest fashion sensation is its bestselling “Everywhere Belt Bag.” Essentially a fanny pack worn like a purse, the belt bag has gone viral and become a social media sensation. The company’s ability to successfully market different products and make many of the items it sells viral sensations has contributed to its success. At the start of June, LULU stock jumped 15% on a Q1 earnings beat. The company announced that its revenue rose 24% in Q1 to $2 billion, sending Wall Street analysts scrambling to revise their forecasts on the stock. As far as fashion stocks go, this is one investors definitely don’t want to overlook.
Ulta Beauty (ULTA)
Barbie is known for her hair and make-up as much as her clothes, and what better cosmetic stock to own than Ulta Beauty (NASDAQ:ULTA). The retail chain of beauty stores has more than 1,200 locations that collectively sell $10 billion worth of cosmetics and fragrances each year. With more than 35,000 employees, Ulta Beauty has been growing at a quick rate, pushing its share price up in the process. ULTA stock has increased 14% in the last 12 months and is up 80% over the past five years.
However, ULTA stock has dipped recently and is 18% below its 52-week high, presenting a decent entry point for investors. Despite the share price drop, Ulta Beauty continues to attract consumers, reporting customer traffic rose 11% in its most recent quarter. The company also enjoys a high profit margin of 17% versus just 6% among other retailers such as Target (NYSE:TGT). And, unlike competing cosmetic companies such as Estee Lauder (NYSE:EL), Ulta Beauty does not have a lot of exposure to China, where consumer sales are waning.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
