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 Gap (NYSE: GAP) 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 0.5% below.
While some apparel retailer stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.3% since the latest earnings results.
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 was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ gross margin estimates.
"In the second quarter, Gap Inc. overdelivered on profit expectations and achieved our topline goals. With positive comps for the sixth consecutive quarter, fueled by our three largest brands Old Navy, Gap and Banana Republic, it's clear our strategy is working," said President and Chief Executive Officer, Richard Dickson.
Unsurprisingly, the stock is down 1.2% since reporting and currently trades at $21.40.
Is now the time to buy Gap? Access our full analysis of the earnings results here, it’s free.
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 happy with the results as the stock is up 25.4% since reporting. It currently trades at $17.10.
Is now the time to buy American Eagle? Access our full analysis of the earnings results here, it’s free.
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, exceeding analysts’ expectations by 0.9%. Still, it was a softer quarter as it posted full-year EBITDA guidance missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates.
Torrid delivered the slowest revenue growth in the group. As expected, the stock is down 27.6% since the results and currently trades at $1.73.
Read our full analysis of Torrid’s results here.
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 $151.3 million, down 7.1% year on year. This print came in 1.8% below analysts' expectations. Taking a step back, it was still a very strong quarter as it produced EPS guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates.
Tilly's had the weakest performance against analyst estimates among its peers. The stock is flat since reporting and currently trades at $2.06.
Read our full, actionable report on Tilly's here, it’s free.
Victoria's Secret (NYSE: VSCO)
Spun off from L Brands in 2020, Victoria’s Secret (NYSE: VSCO) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances.
Victoria's Secret reported revenues of $1.46 billion, up 3% year on year. This result surpassed analysts’ expectations by 4%. It was a very strong quarter as it also put up a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Victoria's Secret pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 17.8% since reporting and currently trades at $26.82.
Read our full, actionable report on Victoria's Secret here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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