The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how apparel retailer stocks fared in Q4, starting with Lululemon (NASDAQ:LULU).
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 12.8% since the latest earnings results.
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 exceeded analysts’ expectations by 0.8%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations significantly.
Lululemon Total Revenue
Lululemon pulled off the fastest revenue growth of the whole group. Still, the market seems discontent with the results. The stock is down 17.7% since reporting and currently trades at $274.55.
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 an impressive beat of analysts’ EPS and EBITDA estimates.
Gap Total Revenue
The market seems happy with the results as the stock is up 17.7% since reporting. It currently trades at $22.95.
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, exceeding analysts’ expectations by 1.2%. Still, it was a slower quarter as it posted EPS guidance for next quarter missing analysts’ expectations and a miss of analysts’ gross margin estimates.
As expected, the stock is down 26.2% since the results and currently trades at $70.98.
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 print was in line with analysts’ expectations. Overall, it was a satisfactory quarter as it also produced a solid beat of analysts’ EBITDA estimates.
The stock is down 2.5% since reporting and currently trades at $11.20.
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 $2.11 billion, up 1.1% year on year. This result topped analysts’ expectations by 1%. It was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ EPS estimates.
Victoria's Secret had the weakest full-year guidance update among its peers. The stock is down 12.6% since reporting and currently trades at $19.39.
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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