Wrapping up Q2 earnings, we look at the numbers and key takeaways for the apparel retailer stocks, including Urban Outfitters (NASDAQ:URBN) 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.
While some apparel retailer stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.9% since the latest earnings results.
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 print exceeded analysts’ expectations by 1%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ EBITDA estimates.
“We are pleased to report record second quarter sales fueled by strength across all three segments – Retail, Nuuly and Wholesale,” said Richard A. Hayne, Chief Executive Officer.
Unsurprisingly, the stock is down 10.1% since reporting and currently trades at $37.31.
Is now the time to buy Urban Outfitters? 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’ earnings and EBITDA estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.5% since reporting. It currently trades at $21.88.
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.
As expected, the stock is down 11% since the results and currently trades at $19.30.
Read our full analysis of American Eagle’s results here.
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 $2.37 billion, up 7.3% year on year. This print came in 1.5% below analysts' expectations. Aside from that, it was a mixed quarter as it also recorded an impressive beat of analysts’ EBITDA estimates but full-year revenue guidance missing analysts’ expectations.
Lululemon had the weakest performance against analyst estimates and weakest full-year guidance update among its peers. The stock is up 19.2% since reporting and currently trades at $308.76.
Read our full, actionable report on Lululemon here, it’s free.
Tilly's (NYSE:TLYS)
With an emphasis on skate and surf culture, Tilly’s (NYSE:TLYS) is a specialty retailer that sells clothing, footwear, and accessories geared towards fashion-forward teens and young adults.
Tilly's reported revenues of $162.9 million, up 1.8% year on year. This result met analysts’ expectations. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ earnings and gross margin estimates.
The stock is down 9.7% since reporting and currently trades at $4.29.
Read our full, actionable report on Tilly's here, it’s free.
Market Update
As expected, the Federal Reserve cut its policy rate by 25bps (a quarter of a percent) in November 2024 after Donald Trump triumphed in the US Presidential election. This marks the central bank's second easing of monetary policy after a large 50bps rate cut two months earlier. Going forward, the markets will debate whether these rate cuts (and more potential ones in 2025) are perfect timing to support the economy or a bit too late for a macro that has already cooled too much. Adding to the degree of difficulty is a new Republican administration that could make large changes to corporate taxes and prior efforts such as the Inflation Reduction Act.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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