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Spotting Winners: Ross Stores (NASDAQ:ROST) And Apparel and Footwear Retail Stocks In Q2

StockStory - Wed Oct 11, 2023

ROST Cover Image

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to other peers in the same sector. Today we are looking at Ross Stores (NASDAQ:ROST), and the best and worst performers in the apparel and footwear retail group.

Apparel and footwear was once a category thought to be relatively safe from major e-commerce penetration because of the need to try on, touch, and feel products, but the category is now meaningfully transacted online. Everyone still needs clothes and shoes to go outside unless they want some curious (or horrified) looks. But this ongoing digitization is forcing apparel and footwear retailers–that once only had brick-and-mortar stores–to respond with omnichannel offerings. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stagnate, so the evolution of clothing and shoes sellers marches on.

The 20 apparel and footwear retail stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 1.93%, while on average next quarter revenue guidance was 0.82% under consensus. Increasing interest rates hurt growth companies as investors search for near-term cash flows, but apparel and footwear retail stocks held their ground better than others, with the share prices up 3.41% since the previous earnings results, on average.

Ross Stores (NASDAQ:ROST)

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Ross Stores reported revenues of $4.93 billion, up 7.68% year on year, beating analyst expectations by 3.92%. It was a strong quarter for the company, with an impressive beat of analysts' same-store sales, revenue, and EPS expectations. EPS guidance for the next quarter and the full year also came in ahead of Wall Street's expectations.

Ross Stores Total Revenue

The stock is up 0.15% since the results and currently trades at $113.1.

Is now the time to buy Ross Stores? Access our full analysis of the earnings results here, it's free.

Best Q2: Boot Barn (NYSE:BOOT)

With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE:BOOT) is a western-inspired apparel and footwear retailer.

Boot Barn reported revenues of $383.7 million, up 4.88% year on year, beating analyst expectations by 5.79%. It was a strong quarter for the company, with revenue and EPS surpassing analysts' expectations. Revenue guidance for the next quarter also came in ahead of consensus estimates.

Boot Barn Total Revenue

Boot Barn delivered the highest full year guidance raise among its peers. The stock is down 9.22% since the results and currently trades at $81.64.

Is now the time to buy Boot Barn? Access our full analysis of the earnings results here, it's free.

American Eagle (NYSE:AEO)

With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer that sells its own brands of fashionable clothing to young adults.

American Eagle reported revenues of $1.2 billion, flat year on year, in line with analyst expectations. It was a decent quarter for the company, with an impressive beat of analysts' earnings estimates. It was also good to see the company increase revenue and operating income guidance for the full year ($260 million in operating income to $337.5 million at the midpoint).

The stock is down 0.29% since the results and currently trades at $17.16.

Read our full, actionable report on American Eagle here, it's free.

Foot Locker (NYSE:FL)

Known for store associates whose uniforms resemble those of referees, Foot Locker (NYSE:FL) is a specialty retailer that sells athletic footwear, clothing, and accessories.

Foot Locker reported revenues of $1.86 billion, down 9.73% year on year, missing analyst expectations by 0.98%. It was a weak quarter for the company, with a miss of analysts' revenue estimates. Foot Locker posted lower-than-expected margins (likely driven by markdowns on items to move merchandise) and paused its dividend to free up resources. Furthermore, it lowered its full-year revenue and EPS estimates again after doing the same during its Q1 earnings.

The stock is down 9.7% since the results and currently trades at $20.95.

Read our full, actionable report on Foot Locker here, it's free.

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The author has no position in any of the stocks mentioned