For me it would depend on how the clothing relates to the gameplay. If it was just for character appearance in gameplay then it would be just a single sprite animation based on what was equipped. If the clothing had some effect in gameplay i.e. the armor would be visibly dropping off the player then i would use separate sprites for that. If it was an inventory I would set the clothing animation as different sprites i.e. armor sprite for armor set to armor selected, shoes sprite for shoes set to shoe selected.