A Look Back at Apparel Retailer Stocks’ Q2 Earnings: American Eagle (NYSE:AEO) Vs The Rest Of The Pack

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 Q2. 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 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 4.9% since the latest earnings results.

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. This print fell short of analysts’ expectations by 1.4%. Overall, it was a slower quarter for the company with a miss of analysts’ EBITDA estimates.

“Our Powering Profitable Growth strategy is off to a great start, locking in a strong first half and setting us on track to achieve the high end of our prior operating profit outlook for 2024. The second quarter marked our sixth consecutive quarter of record revenue and we successfully leveraged our cost base – advancing a number of strategic priorities to fuel growth across brands and channels and drive operating efficiencies,” commented Jay Schottenstein, AEO’s Executive Chairman of the Board and Chief Executive Officer.

Unsurprisingly, the stock is down 11% since reporting and currently trades at $19.30.

Read our full report on American Eagle 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.

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 $1.42 billion, flat year on year, in line with analysts’ expectations. It was a slower quarter as it posted underwhelming earnings guidance for the next quarter and a miss of analysts’ EBITDA estimates.

Interestingly, the stock is up 44.8% since the results and currently trades at $36.

Read our full analysis of Victoria's Secret’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. More broadly, it was a mixed quarter as it also produced 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.

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 $1.13 billion, up 21.2% year on year. This number surpassed analysts’ expectations by 4.1%. It was a very strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ earnings estimates.

Abercrombie and Fitch achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is down 14.6% since reporting and currently trades at $142.49.

Read our full, actionable report on Abercrombie and Fitch 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 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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