Wrapping up Q2 earnings, we look at the numbers and key takeaways for the apparel retailer stocks, including Zumiez (NASDAQ:ZUMZ) and its peers.
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 0.5% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.3% since the latest earnings results.
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 $210.2 million, up 8.1% year on year. This print exceeded analysts’ expectations by 4.1%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We experienced a noticeable acceleration in our sales trend as the second quarter unfolded, with July North America comparable sales increasing in the high-single digits. The work our merchandise teams have done refining our apparel and footwear assortments combined with enhanced customer engagement tactics from our in-store and online sales associates led to better than expected second quarter results and a strong back-to-school season in North America.”
Unsurprisingly, the stock is down 17.1% since reporting and currently trades at $21.28.
Is now the time to buy Zumiez? Access our full analysis of the earnings results here, it’s free.
Best Q2: Gap (NYSE:GAP)
Operating under The Gap, Old Navy, Banana Republic, and Athleta brands, The Gap (NYSE:GAP) is an apparel and accessories retailer that sells its own brand of casual clothing to men, women, and children.
Gap reported revenues of $3.72 billion, up 4.8% year on year, outperforming analysts’ expectations by 2.6%. The business had a stunning quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 4.5% since reporting. It currently trades at $21.43.
Is now the time to buy Gap? Access our full analysis of the earnings results here, it’s free.
Weakest 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 $1.29 billion, up 7.5% year on year, falling short of analysts’ expectations by 1.4%. It was a slower quarter as it posted a miss of analysts’ EBITDA estimates and gross margin in line with analysts’ estimates.
As expected, the stock is down 18.3% since the results and currently trades at $17.72.
Read our full analysis of American Eagle’s results here.
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 $284.6 million, down 1.6% year on year. This print topped analysts’ expectations by 0.6%. Overall, it was a strong quarter as it also logged EBITDA guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
Torrid scored the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is down 34.2% since reporting and currently trades at $4.04.
Read our full, actionable report on Torrid here, it’s free.
Urban Outfitters (NASDAQ:URBN)
Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ:URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.
Urban Outfitters reported revenues of $1.35 billion, up 6.3% year on year. This number topped analysts’ expectations by 1%. It was an exceptional quarter as it also logged an impressive beat of analysts’ EBITDA and gross margin estimates.
The stock is down 8.2% since reporting and currently trades at $38.10.
Read our full, actionable report on Urban Outfitters here, it’s free.
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 US 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. Said differently, there's still much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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