Key Points
Crocs generated $4.1 billion in revenue over the last year.
Kontoor Brands offers a 2.7% dividend yield.
Lululemon is down 47% in 2025.
10 stocks we like better than Lululemon Athletica Inc. ›
As the overall stock market has marched on in 2025, it’s been a tough year for some of fashion’s most recognizable names. From a regretful acquisition to falling consumer confidence, even strong brands haven’t been spared in 2025.
But while the market punishes them, I see three beaten-down stocks that could be setting up for a surprising rebound.
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1. Crocs’ acquisition of HeyDude hasn’t worked out
After proving the doubters wrong on the power of its brand, Crocs (NASDAQ: CROX) went out and acquired competing casual footwear brand HeyDude for $2.05 billion in cash and about $500 million in stock. Unfortunately, the acquisition has disappointed investors as Crocs recently wrote down a $737 million impairment charge against the HeyDude brand.
Most recently, HeyDude generated $190 million in revenue in the second quarter 2025, representing a decline of 3.9% year over year. Meanwhile, the Crocs brand has remained resilient, generating $960 million in revenue, a 5% increase year over year.
What may have spooked investors most was management’s guidance, projecting a revenue decline of approximately 9% to 11% in the third quarter of 2025 compared to the same period last year.
So, why do I like Crocs? It’s still profitable and incredibly cheap, and management is buying back its stock. First, the company generated $769 million in free cash flow over the last 12 months while its entire market capitalization stands at $4.7 billion after declining 23% in 2025, creating a valuation of only 6.5 times free cash flow. Additionally, when you consider that management has $1.1 billion remaining on its share repurchase program, the stock looks even cheaper.
The company will have to navigate the diminishing returns on its HeyDude brand in the future, but the Crocs brand remains a winner.
2. Kontoor Brands: A dividend play
Kontoor Brands (NYSE: KTB) may not be a household name, but chances are you’ve worn something from its portfolio. The company owns denim staples Lee and Wrangler, and in 2025, it added premium outerwear label Helly Hansen to the mix. That acquisition is already moving the needle.
In Q2 2025, Kontoor posted $658 million in revenue, up 8% year over year, or 4% excluding Helly Hansen. For the full year, the company now expects revenue between $3.09 and $3.12 billion, a 19 to 20% increase, with Helly Hansen contributing most of that growth. Adjusted operating income is forecast at $443 million, up 16% from last year.
Despite spending $901 million on the Helly Hansen deal, Kontoor is already chipping away at its debt, paying down $25 million in Q2 alone. But what really stands out is the company’s ongoing commitment to returning capital to shareholders. Management has made the dividend a clear priority — reflected in its quarterly dividend of $0.52 per share, equating to an outsized 2.7% annual yield.
Given Kontoor’s relatively low payout ratio — percentage of earnings paid out as dividends — of 45.4%, management will likely announce a dividend hike in October, just as it has done the previous four years.
At just 14 times forward earnings, Kontoor offers a compelling mix of income, stability, and enduring brand strength from names like Lee and Wrangler — an unusual trait in the cyclical fashion industry.
3. Lululemon: From growth to value
Just a year ago, Lululemon (NASDAQ: LULU) stood at the top of the activewear world. But in 2025, the stock has fallen 47%, as investors grew concerned about slowing sales growth and a more cautious consumer. Once priced for perfection, Lululemon is now being repriced for uncertainty.
In its fiscal first-quarter 2025 results, Lululemon reported $2.4 billion in revenue, a 7% year-over-year increase. Despite the top-line growth, net income declined 2% to $314.6 million, weighed down by higher selling, general, and administrative expenses, which rose to $942.9 million from $842.4 million a year ago. Management attributed the increase in part to a foreign exchange revaluation loss.
Looking ahead, the company expects full-year revenue growth of 5% to 7%, compared to 2024, which included the benefit of a 53rd week.
Like Crocs, Lululemon is aggressively repurchasing shares. It spent $430 million on buybacks in the most recent quarter and has reduced its share count by 6% over the past three years.
As for valuation, Lululemon now trades at a forward price-earnings-ratio below 14 — a historic low for the stock. With strong fundamentals, modest net debt of $382 million, and a still-loyal customer base, this pullback looks more like an opportunity than a warning sign.
Bottom line: Strong brands endure any fashion cycles
It’s no secret that fashion stocks can be volatile. Trends fade, and consumers pull back. However, brands with staying power, solid earnings, and disciplined execution can still thrive over the long term. These three names have stumbled in 2025, but with beaten-down valuations and long runways ahead, they are three of my favorite stocks to buy right now.
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Collin Brantmeyer has positions in Crocs. The Motley Fool has positions in and recommends Lululemon Athletica Inc. The Motley Fool recommends Crocs and Kontoor Brands. The Motley Fool has a disclosure policy.
