Luxury retail stocks gain focus as outlet expansion supports growth

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Luxury retail outlet expansion

Highlights

Luxury market customer base shrank by 70 million since 2022 to 330 million by end-2025, with 2025 sales expected to fall 2% to just over $400 billion.
Ralph Lauren is forecast to grow revenue to $8.627 billion in the current fiscal year, with Wells Fargo assigning a $425 price target (14% upside).
Bernstein gives Tapestry a $180 price target (26% upside) amid strong Coach outlet growth, while Citi and Bernstein see Capri Holdings with 55–100% upside despite a 36% YTD share drop.

Outlet strategy reshapes luxury retail demand

As reported by CNBC, retailers including Coach and Ralph Lauren are investing in outlet operations to turn discount locations into more polished shopping destinations rather than clearance channels for old inventory. The shift targets consumers willing to stretch their budgets for premium brands, a group that analysts and academics describe as increasingly important as luxury demand weakens.

Kinshuk Jerath, a professor at Columbia Business School, says outlets are no longer viewed mainly as an inventory disposal tool, but as an alternative channel for value-conscious consumers still seeking premium labels. Bain data cited in the report show the luxury market has lost about 70 million customers since 2022, falling to roughly 330 million by the end of 2025, while sales in 2025 decline about 2% to just over $400 billion.

The market slowdown is also visible in sector performance. The U.S. Global Investors Funds Global Luxury Goods Fund, which includes holdings such as LVMH, Ferrari, Hermes and Christian Dior, is down about 7% year to date, while the S&P 500 is up more than 8%, according to FactSet.

Retailers are responding with a dual-tier model that keeps top-tier merchandise in mainline stores while placing made-for-factory goods and selected full-price items in outlet locations. Citi analyst Paul Lejuez says Coach and Ralph Lauren have improved the outlet experience by becoming less promotional and adding more full-price products that already perform well in other channels, helping them connect with new customers.

Analysts see upside for Ralph Lauren, Tapestry and Capri

Analysts say the outlet strategy still leaves room for stock gains, particularly for Ralph Lauren and Tapestry. Wells Fargo analyst Ike Boruchow says Ralph Lauren is seeing further potential from better sales quality after nearly doubling net sales since fiscal 2021 to more than $8 billion in the fiscal year ended in March.

FactSet data show analysts on average expect Ralph Lauren revenue to reach $8.627 billion in the current fiscal year. Boruchow says the company has focused more on full-price stores, upgraded products in outlet and wholesale channels, and reduced off-price exposure by 75% since fiscal 2018; Wells Fargo has an overweight rating and a $425 price target, implying 14% upside from Friday's close.

Bernstein analyst Aneesha Sherman says Tapestry also stands to benefit as new customers enter at higher average unit retail and higher spending levels. She says Coach has posted sales growth of 20 percentage points or more in recent quarters while higher-end luxury brands are showing little or low-single-digit growth; Bernstein has an outperform rating on Tapestry and a $180 price target, implying 26% upside from Friday's close.

Capri Holdings, owner of Michael Kors, is another name analysts are watching. Sherman says Michael Kors is adjusting its pricing and upgrading outlet assortments, with a new product line expected in the fall, while Citi's Lejuez says the approach could work given similarities with Coach's business model. Sherman rates Capri at market perform with a $24 price target, implying 55% upside, while Lejuez has a $31 target, suggesting 100% upside even after Capri shares fall 36% year to date.

Our earlier coverage of MarineMax’s potential sale detailed how the luxury yacht retailer drew final-round takeover interest from multiple buyout firms amid investor pressure and rising appetite for marina assets. We noted that deal activity in marinas and superyacht services has accelerated, supported in part by lower interest rates and continued spending by high-end consumers even as other groups face tighter budgets.

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