Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Torrid (NYSE: CURV) and the best and worst performers in the apparel retailer industry.
Apparel sales are not driven so much by personal needs but by seasons, trends, and innovation, and over the last few decades, the category has shifted meaningfully online. Retailers that once only had brick-and-mortar stores are responding with omnichannel presences. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stall, so the evolution of clothing sellers marches on.
The 9 apparel retailer stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 11% since the latest earnings results.
Weakest Q2: Torrid (NYSE: CURV)
Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE: CURV) is a plus-size women’s apparel and accessories retailer.
Torrid reported revenues of $262.8 million, down 7.7% year on year. This print exceeded analysts’ expectations by 0.9%. Despite the top-line beat, it was still a disappointing quarter for the company with full-year EBITDA guidance missing analysts’ expectations and revenue guidance for next quarter missing analysts’ expectations significantly.
Torrid achieved the highest full-year guidance raise but had the slowest revenue growth of the whole group. Still, the market seems discontent with the results. The stock is down 4% since reporting and currently trades at $1.50.
Read our full report on Torrid here, it’s free for active Edge members.
Best Q2: American Eagle (NYSE: AEO)
With a heavy focus on denim, American Eagle Outfitters (NYSE: AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults.
American Eagle reported revenues of $1.28 billion, flat year on year, outperforming analysts’ expectations by 4%. The business had an incredible quarter with a beat of analysts’ EPS and gross margin estimates.
The market seems content with the results as the stock is up 4% since reporting. It currently trades at $14.19.
Is now the time to buy American Eagle? Access our full analysis of the earnings results here, it’s free for active Edge members.
Lululemon (NASDAQ: LULU)
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Lululemon reported revenues of $2.53 billion, up 6.5% year on year, falling short of analysts’ expectations by 0.5%. It was a slower quarter as it posted full-year EPS guidance missing analysts’ expectations and EPS guidance for next quarter missing analysts’ expectations.
Lululemon delivered the weakest full-year guidance update in the group. As expected, the stock is down 19.8% since the results and currently trades at $165.33.
Read our full analysis of Lululemon’s results here.
Zumiez (NASDAQ: ZUMZ)
With store associates called “Zumiez Stash Members”, Zumiez (NASDAQ: ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories.
Zumiez reported revenues of $214.3 million, up 1.9% year on year. This result surpassed analysts’ expectations by 1.4%. It was a stunning quarter as it also put up EPS guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates.
The stock is up 3.8% since reporting and currently trades at $19.16.
Read our full, actionable report on Zumiez here, it’s free for active Edge members.
Gap (NYSE: GAP)
Operating under the Gap, Old Navy, Banana Republic, and Athleta brands, Gap (NYSE: GAP) is an apparel and accessories retailer selling casual clothing to men, women, and children.
Gap reported revenues of $3.73 billion, flat year on year. This print met analysts’ expectations. Zooming out, it was a satisfactory quarter as it also logged an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ gross margin estimates.
The stock is down 10.6% since reporting and currently trades at $19.37.
Read our full, actionable report on Gap here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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