As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at apparel retailer stocks, starting with American Eagle (NYSE:AEO).
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 mixed Q1. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 2.4% on average since the latest earnings results.
Weakest Q1: 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 $1.09 billion, down 4.7% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with a significant miss of analysts’ EBITDA and EPS estimates.
“As we noted in our preliminary release, the first quarter was a challenging period for our business. While we are disappointed with the results, we are taking actions to better position the company and drive stronger performance in the upcoming quarters. Our brands remain resilient. The team is executing with urgency as we look to strengthen both the topline and profit flow-through,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.
Interestingly, the stock is up 8.5% since reporting and currently trades at $12.13.
Read our full report on American Eagle here, it’s free.
Best Q1: 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 $1.33 billion, up 10.7% year on year, outperforming analysts’ expectations by 2.5%. The business had a stunning quarter with an impressive beat of analysts’ EPS and EBITDA estimates.
Urban Outfitters achieved the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 30.7% since reporting. It currently trades at $77.93.
Is now the time to buy Urban Outfitters? Access our full analysis of the earnings results here, it’s free.
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 $184.3 million, up 3.9% year on year, exceeding analysts’ expectations by 1.2%. Still, it was a slower quarter as it posted a significant miss of analysts’ EBITDA estimates and EPS guidance for next quarter missing analysts’ expectations significantly.
Interestingly, the stock is up 20.1% since the results and currently trades at $15.44.
Read our full analysis of Zumiez’s results here.
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 $3.46 billion, up 2.2% year on year. This print topped analysts’ expectations by 1.3%. It was a very strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ EPS estimates.
The stock is down 27% since reporting and currently trades at $20.41.
Read our full, actionable report on Gap 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 $1.35 billion, flat year on year. This number beat analysts’ expectations by 0.8%. More broadly, it was a satisfactory quarter as it also recorded a solid beat of analysts’ EPS estimates but a significant miss of analysts’ gross margin estimates.
Victoria's Secret delivered the highest full-year guidance raise among its peers. The stock is down 6.4% since reporting and currently trades at $20.77.
Read our full, actionable report on Victoria's Secret here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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