As the Q4 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the apparel retailer industry, including Abercrombie and Fitch (NYSE: ANF) 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 satisfactory Q4. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 1.6% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 12.1% since the latest earnings results.
Weakest Q4: Abercrombie and Fitch (NYSE: ANF)
Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.
Abercrombie and Fitch reported revenues of $1.58 billion, up 9.1% year on year. This print exceeded analysts’ expectations by 1.2%. Despite the top-line beat, it was still a slower quarter for the company with EPS guidance for next quarter missing analysts’ expectations and a miss of analysts’ gross margin estimates.
Fran Horowitz, Chief Executive Officer, said, “In fiscal 2024, we once again delivered on our commitments to our global customers and shareholders. We entered the fiscal year with the goal of achieving sustainable, profitable growth on top of a defining fiscal 2023, and our collective effort and focus produced results well beyond our initial expectations. We grew net sales 16% to nearly $5 billion while expanding operating margin to 15%, with operating income and EPS growth of 53% and 72%, respectively.
Unsurprisingly, the stock is down 28.4% since reporting and currently trades at $68.85.
Is now the time to buy Abercrombie and Fitch? Access our full analysis of the earnings results here, it’s free.
Best Q4: 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 $4.15 billion, down 3.5% year on year, outperforming analysts’ expectations by 1.9%. The business had a very strong quarter with a solid beat of analysts’ EPS and EBITDA estimates.
The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $22.05.
Is now the time to buy Gap? Access our full analysis of the earnings results 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 $147.3 million, down 14.9% year on year, falling short of analysts’ expectations by 7.9%. It was a slower quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
Tilly's delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 54% since the results and currently trades at $1.50.
Read our full analysis of Tilly’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 $3.61 billion, up 12.7% year on year. This print beat analysts’ expectations by 0.8%. More broadly, it was a mixed quarter as it also logged a solid beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations significantly.
Lululemon achieved the fastest revenue growth among its peers. The stock is down 21.4% since reporting and currently trades at $268.60.
Read our full, actionable report on Lululemon here, it’s free.
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 $1.60 billion, down 4.4% year on year. This number was in line with analysts’ expectations. Overall, it was a satisfactory quarter as it also put up a solid beat of analysts’ EBITDA estimates.
The stock is down 7% since reporting and currently trades at $10.69.
Read our full, actionable report on American Eagle 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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