As per a 2021 outlook report from Moody’s Investor Services, apparel retail is set to bounce back.The report expects operating profit of department stores, including Macy's, Nordstrom and Kohl's, to rise over 500 per cent; at off-prices like TJX Companies and Ross more than 450 per cent; and at apparel and footwear retailers brands like those at Tapestry, Gap Inc. and L Brands by over 100 per cent.

The report says, casualization accelerated by the pandemic will continue, as will online sales and healthy living trends, benefiting companies like Nike, Under Armour, VF Corp and Wolverine World Wide. Work and formal attire will continue to decline but companies like PVH Corp. and G-III Apparel Group will prosper thanks to their diversity of merchandise and "ability to tactically evolve product mix. The analyst expects strong profit improvement" next year thanks to international sales and sales growth, cost cutting and inventory management.

Moody's analysts also describe 2021 ripe for a comeback for some apparel retailers, who had to react not just to the pandemic's disruption of their front and back operations, but also to swiftly changing consumer behavior. As per the report, many of those behaviors are set to last beyond the pandemic. Migration online will continue to pressure profit margins. However, it will also increase price competition to gain market share.

The lingering economic troubles will hit financially weaker retailers especially hard and erode the positive effects of low interest rates on debt servicing capacity, said Moody's. Despite the sales recovery, helped along by the upcoming year-over-year comparisons, more stores are expected to shut down, the analyst warned.