Nike (NKE 0.99%) has seen its stock drop nearly 70% from its highest point over recent years. This decline partially stems from the company’s own decisions, compounded by declining consumer spending. As a result, sales have faced significant pressure, impacting share prices.
However, the issues faced by one brand shouldn’t deter investors from the retail and apparel sector as a whole. Many companies are navigating similar economic challenges but are still reporting robust financials. The focus should be on those businesses that are powered by several growth factors, strong brand pricing power, or emerging growth opportunities.
With that framework in mind, here are three retail growth stocks that I would recommend buying and holding over the long term.
1. Amazon
Amazon (AMZN 0.38%) became the leading apparel retailer in 2018, according to Wells Fargo, and is continually solidifying its position through its extensive selection and vast fulfillment network that ensures quick deliveries.
Amazon is leveraging artificial intelligence (AI) to strengthen its competitive edge. Its shopping assistant, Rufus, was utilized by over 300 million customers last year, enhancing product discovery, customer loyalty, and sales. Following a period of slow sales, Amazon’s online store is recovering, with sales rising 9% year-over-year to $269 billion in 2025. Additionally, fast-growing segments such as advertising, subscription services, and cloud computing contributed to a 12% increase in total revenue, reaching $716 billion.
2. Lululemon Athletica
Lululemon (LULU 1.95%) has also experienced a dip in its stock over the past year due to reduced consumer spending. Nevertheless, Lululemon has consistently achieved stronger revenue growth compared to Nike, with approximately 1% year-over-year growth reported in the latest quarter versus Nike’s stagnant revenue.
A key opportunity for Lululemon is its international growth. While the North American market struggles, its international sales are flourishing, particularly in China, where revenue soared 24%. In contrast, Nike saw a 7% decline in China with minimal growth elsewhere. Lululemon’s international success suggests a robust long-term potential. The stock is currently priced as if its best days are behind it, trading at a forward price-to-earnings ratio of 12 based on consensus earnings estimates.
3. On Holding
If you’re in search of the “next Nike,” On Holding (ONON 5.00%) is a strong candidate. The brand has transformed its Cloud footwear line into a potent growth generator, quadrupling annual revenue since 2021.
Last quarter, On reported a 23% increase in year-over-year revenue, showcasing strong demand despite overall weak consumer spending. The company’s gross margin reached a record 64%, illustrating its premium pricing power, compared to Nike’s 40% margin. Despite minor slowdowns in growth, the long-term outlook for this stock appears positive, trading around 21 times forward earnings while analysts predict an annualized earnings growth of roughly 26% over the next few years.
While Nike may be facing challenges, there are still successful companies within the retail sector. In this climate, the best opportunities are found in firms with diverse growth drivers, strong pricing power, and promising growth trajectories. Amazon, Lululemon, and On Holding exemplify these attributes.
