Could Walmart become a bigger fashion destination? One analyst thinks so.

By Bill Peters

Big-box chain is harnessing design teams to offer more stylish clothing, and is only 'scratching the surface' on fashion offerings, UBS analysts say

Walmart's stock is up around 28% over the past 12 months.

Over the past few years, discount-retail behemoth Walmart Inc. has only gotten bigger, as it draws more shoppers trying to manage higher prices for basics. Now, UBS analysts said on Monday, the big-box chain has a chance to expand in an area it's never exactly been known for: fashion.

The analysts, led by Michael Lasser, said Walmart (WMT) is shifting from away from selling generic clothing and toward private brands with a "clear identity," and putting more of a push behind its Scoop and Free Assembly lines, which are part of the company's play toward higher-end apparel. The company is even using artificial intelligence to scour the internet for design ideas.

The analysts also said Walmart is looking to bring in more national brands, such as Reebok, Jessica Simpson and Polo, and added they're seeing signs that it is gaining traction among younger shoppers. And they noted that over the past few years, Walmart has been assembling a team of designers in New York, with teams behind each private-label brand.

"We think it's only scratching the surface, considering how much more of a priority this category now represents versus a few years ago," Lasser wrote.

He said that overall, Walmart over the past few years has been using its e-commerce network more effectively, and putting more of an emphasis on quality rather than price.

"Its products look much sharper and fashion-forward," Lasser said. "We think it has the potential to replicate these elements in other general merchandise categories. In our view, this will materialize over time."

The analysts made the remarks after a visit on Friday to a Walmart fashion pop-up event in New York, where the chain was promoting the Scoop and Free Assembly lines. More than 70% of the visitors to that event were millennials or Gen Z, the analysts said. Overall, shoppers in those age ranges normally make up under half of Walmart's customers overall. The pop-up ran from Sept. 12 to Sept. 21.

Scoop is a women's fashion brand that sells clothing and handbags. Free Assembly is geared toward men, women and children. The analysts said most products from these two lines are selling for between $15 and $35.

"After a period of reinvention four years ago, these brands now offer trend-oriented, fashion-forward items," Lasser said. "It appears to be seeing great traction with these two brands."

The amount of clothing from those two brands that Walmart keeps in stock is up 100% year over year, he wrote, "yet it's still experiencing strong sell-throughs."

The UBS analysts estimated that Walmart's fashion sales could have hit around $31 billion last year. By comparison, they said, Target Corp.'s (TGT) clothing, footwear and accessories sales landed at $16.5 billion in 2024. As shoppers battle inflation and concerns about tariffs, Walmart, more broadly, has found itself with the upper hand over Target.

Over the past few years, more shoppers have stayed away from buying new clothes, as they prioritize other more essential costs of living. Some apparel makers and retailers are trying to entice those shoppers with newer, more fashion-relevant offerings.

Walmart, the analysts said, has turned to artificial intelligence to help develop new styles. They said the company is using a tool called Trend-to-Product to analyze global fashion trends online and generate "design-ready briefs for designers."

"This reduces what used to be a week-long process for designers to just a couple of minutes," Lasser wrote. "From there, designers make refinements to curate the product. This technology helps Walmart in making monthly drops across some of its private-label assortments in apparel, boosting its newness engine."

Shares of Walmart were up 0.6% on Monday. The stock is up around 28% over the past 12 months.

-Bill Peters

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-22-25 1512ET