Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at 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 mixed Q1. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was in line.
While some apparel retailer stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.2% since the latest earnings results.
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 $1.10 billion, up 7.5% year on year. This print exceeded analysts’ expectations by 3.5%. Overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations significantly.
Fran Horowitz, Chief Executive Officer, said, "We delivered record first quarter net sales with 8% growth to last year. This was above our expectations and was supported by broad-based growth across our three regions. Hollister brands led the performance with growth of 22%, achieving its best ever first quarter net sales, while Abercrombie brands net sales were down 4% against 31% sales growth in 2024. We exceeded our expectations on the bottom line as well, with operating margin of 9.3% and earnings per share of $1.59. We also returned excess cash to shareholders through share repurchases totaling $200 million in the quarter, marking our fifth consecutive quarter of share repurchases."
Abercrombie and Fitch pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 18.7% since reporting and currently trades at $91.60.
Is now the time to buy Abercrombie and Fitch? Access our full analysis of the earnings results 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 24.1% since reporting. It currently trades at $73.97.
Is now the time to buy Urban Outfitters? Access our full analysis of the earnings results here, it’s free.
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, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
As expected, the stock is down 8.1% since the results and currently trades at $10.28.
Read our full analysis of American Eagle’s results here.
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 print surpassed analysts’ expectations by 0.8%. Aside from that, it was a satisfactory quarter as it also produced a solid beat of analysts’ EPS estimates.
Victoria's Secret pulled off the highest full-year guidance raise among its peers. The stock is down 7.3% since reporting and currently trades at $20.57.
Read our full, actionable report on Victoria's Secret here, it’s free.
Torrid (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 $266 million, down 4.9% year on year. This result came in 1.6% below analysts' expectations. Overall, it was a slower quarter as it also recorded a significant miss of analysts’ gross margin estimates and EBITDA guidance for next quarter missing analysts’ expectations.
Torrid had the weakest performance against analyst estimates and weakest full-year guidance update among its peers. The stock is down 41.9% since reporting and currently trades at $2.90.
Read our full, actionable report on Torrid 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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