The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how American Eagle (NYSE:AEO) and the rest of the apparel retailer stocks fared in Q1.
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 Q1. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 0.6% above.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. However, apparel retailer stocks have held steady amidst all this with share prices up 4.2% on average since the latest earnings results.
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 $1.14 billion, up 5.8% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a solid beat of analysts’ earnings and gross margin estimates.
“Our strong first quarter results underscore the power of our iconic brand portfolio and demonstrate great progress on our Powering Profitable Growth strategy. We achieved record revenue, amplifying American Eagle’s and Aerie’s leading market positions and opportunity in casual apparel. We continued to offer exciting merchandise collections and customer activations, providing compelling in-store and digital shopping experiences. This, combined with actions to optimize our operations and drive efficiencies across the organization, contributed to meaningful profit expansion, which was ahead of expectations,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.
American Eagle delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 10.7% since reporting and currently trades at $21.45.
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Best Q1: 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 $177.4 million, down 3% year on year, outperforming analysts’ expectations by 3.4%. It was a stunning quarter for the company with optimistic earnings guidance for the next quarter and an impressive beat of analysts’ gross margin estimates.
The market seems happy with the results as the stock is up 35.3% since reporting. It currently trades at $26.12.
Weakest Q1: Tilly's (NYSE: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 $115.9 million, down 6.3% year on year, in line with analysts’ expectations. It was a slower quarter for the company with underwhelming earnings guidance for the next quarter and a miss of analysts’ earnings estimates.
Tilly's had the slowest revenue growth in the group. As expected, the stock is down 19% since the results and currently trades at $4.70.
Torrid (NYSE: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 $279.8 million, down 4.8% year on year, in line with analysts’ expectations. Taking a step back, it was a strong quarter for the company with an impressive beat of analysts’ earnings and gross margin estimates.
Torrid scored the highest full-year guidance raise among its peers. The stock is up 12.7% since reporting and currently trades at $7.52.
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 $1.20 billion, up 7.8% year on year, surpassing analysts’ expectations by 1.8%. More broadly, it was a strong quarter for the company with an impressive beat of analysts’ earnings estimates and a decent beat of analysts’ gross margin estimates.
The stock is flat since reporting and currently trades at $41.21.
This content was originally published on Stock Story
