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Q2 Earnings Roundup: Gap (NYSE:GPS) And The Rest Of The Apparel Retailer Segment

StockStory - Fri Oct 13, 2023

GPS Cover Image

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 the apparel retailer stocks, starting with Gap (NYSE:GPS).

Apparel sales are not driven so much by personal need 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 10 apparel retailer stocks we track reported a slower Q2; on average, revenues beat analyst consensus estimates by 1.9%, while on average next quarter revenue guidance was 1.53% under consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again, but apparel retailer stocks held their ground better than others, with the share prices up 4.8% since the previous earnings results, on average.

Gap (NYSE:GPS)

Operating under The Gap, Old Navy, Banana Republic, and Athleta brands, The Gap (NYSE:GPS) is an apparel and accessories retailer that sells its own brand of casual clothing to men, women, and children.

Gap reported revenues of $3.55 billion, down 8.01% year on year, missing analyst expectations by 1.19%. It was a mixed quarter for the company, with an impressive beat of analysts' EPS and free cash flow estimates. On the other hand, the company's revenue missed analysts' expectations, and it lowered its full-year revenue guidance.

"I have long admired Gap Inc. as a customer, a brand builder, and most recently, as a Board member. An even greater draw is the company's storied brands. And I'm excited for the opportunity to lead the incredible people of Gap Inc. to unlock our full potential," said Richard Dickson, President and Chief Executive Officer,

Gap Total Revenue

The stock is up 18.6% since the results and currently trades at $11.3.

Read our full report on Gap here, it's free.

Best Q2: 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 $935.3 million, up 16.2% year on year, beating analyst expectations by 10.8%. It was a strong quarter for the company, with revenue and EPS exceeding expectations, driven by impressive sales growth at Abercrombie brands and a huge operating margin increase. On top of that, the company raised its full-year revenue guidance from 3% growth all the way up to 10% while changing its operating margin estimate from 5.5% to 8.5%.

Abercrombie and Fitch Total Revenue

Abercrombie and Fitch delivered the strongest analyst estimates beat and fastest revenue growth among its peers. The stock is up 50% since the results and currently trades at $61.75.

Is now the time to buy Abercrombie and Fitch? 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 $160 million, down 4.97% year on year, beating analyst expectations by 5.99%. It was a decent quarter for the company, with same-store sales, revenue, and EPS all exceeding analysts' expectations. 

The stock is down 8.9% since the results and currently trades at $8.19.

Read our full, actionable report on Tilly's 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 1.05% since the results and currently trades at $17.03.

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

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The author has no position in any of the stocks mentioned

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