Perry Ellis, Under Armour Among Top Performing Apparel Stocks in 2014

Apparel and footwear stocks underperformed the overall market in 2014–but that didn’t stop a handful of successful industry players from seeing their share prices soar to new heights last year.

The average industry stock rose by 4.5% in the 12 months ended Dec. 31, 2014, lagging the Dow Jones Industrial Average’s gain of 7.5%.

Superior Uniform Group (SGC) was the top apparel stock for the year, skyrocketing 88 percent to $29.37. The company improved sales and earnings by exiting unprofitable businesses, like its core operating room apparel category, and moved from relying on distributors to dealing directly with big hospital systems. To make gains in the non-health care uniform business, it acquired a competitor, Atlanta-based HPI Direct, in 2013. To lower costs and improve service, it moved jobs to its call center in Central America.

Footwear maker Skechers gained 67 percent to $55.25 by repeatedly outperforming quarterly sales and earnings expectations and  delivering strong results across its domestic and overseas wholesale operations and its company-owned retail locations. The company was named 2014 Company of the Year by Footwear News. Analysts expect Skechers to continue offering a diversified portfolio of brands in the fashion, athletic, non-athletic and work footwear segments at compelling prices.

Perry Ellis International, owner of the Perry Ellis, Callaway Golf, Original Penguin and other brands, gained 62.7% to $25.93. In July, activist investor Legion Partners Asset Management teamed with the California State Teachers pension fund to disclose an almost 6 percent stake in the stock and began pressuring the company to review strategic alternatives. The company was reportedly approached by Sequential Brands Group about a possible takeover, though no further details have been revealed. Company founder, chairman and CEO George Feldenkreis and his son, COO Oscar Feldenkreis, are the largest and third-largest stakeholders, reportedly controlling 10.7% and 6.7% of the company’s shares, respectively.

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Hanesbrands jumped 61 percent to $111.62 as the underwear maker continued to deliver quarterly results that topped Wall Street expectations and enjoyed growth and synergies from recent acquisitions Maidenform, Inc., and European underwear maker (and Wonderbra licensee) DBA apparel.

Under Armour (UA) was on fire all year, its stock finishing up 57.9% to $67.90. The company recovered quickly and gracefully from accusations that its speed skating uniform caused the U.S. Olympic team to finish out of medal contention at the Sochi games and proceeded to move at a breakneck pace to take share from much larger rival Nike. It also managed to unseat Adidas from its spot as the number two athletic apparel and footwear brand in the U.S. market. The company recently posted its 18th consecutive quarter of 20-percent revenue growth. Its groundbreaking ad campaign featuring American Ballet Theatre star Misty Copeland helped solidify its position among female consumers. The ad video has reached over 7 million YouTube views and garnered the company Ad Age’s 2014 Marketer of the Year award.

Among the worst performing industry stocks was department store operator BonTon Stores, down 54.8% to $7.41 for the year as the company failed to make sufficient progress with its turnaround efforts. In August, former Belk executive Kathryn Bufano replaced Brendan Hoffman, who decided not to renew his three-year contract as CEO of the 271-store chain.

Destination Maternity (DEST) plunged 48.4% in 2014. Many in the maternity clothing sector have bemoaned the fact that conventional fashion styles are so stretchy and loose-fitting these days that many expectant women don’t need to buy maternity clothes. In addition, a slow decline in the U.S. birth rate has resulted in fewer pregnant women. Destination made unsuccessful overtures to U.K.-based Mothercare Plc seeking to acquire the 1,000-store chain that sells products for babies and young children.

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Ascena Retail Group (ASNA) fell by 40.4% in the year, to $12.56. The operator of Lane Bryant, Justice, maurice’s and other mall-based specialty brands has suffered from the decline in foot traffic and the tough competition by fast-fashion players.

Delta Apparel (DLA) also failed to impress investors, and its stock lost 38.4% in 2014, to $10.18. The company, whose brands include M.J. Soffe, Junkfood and Art Gun, is a global design, marketing, manufacturing company of basic and branded activewear apparel and headwear products. During the year it consolidated fabric production for basic blank tee shirts to its facility in Honduras from Maiden, North Carolina in order to reduce costs. The move was expected to result in an increase in production in Honduras to 900,000 lbs of fabric per week and reduce production in the Maiden facility by 35 percent.

Guess? (GES) dropped 32.6% in the year to $21.08, apparently challenged by denim’s fall from grace among consumers, who opted instead for leggings, yoga pants and other stretchy alternatives.

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