As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the specialty retail industry, including National Vision (NASDAQ:EYE) and its peers.
Some retailers try to sell everything under the sun, while others—appropriately called Specialty Retailers—focus on selling a narrow category and aiming to be exceptional at it. Whether it’s eyeglasses, sporting goods, or beauty and cosmetics, these stores win with depth of product in their category as well as in-store expertise and guidance for shoppers who need it. E-commerce competition exists and waning retail foot traffic impacts these retailers, but the magnitude of the headwinds depends on what they sell and what extra value they provide in their stores.
The 4 specialty retail stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 2.5% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 17.9% since the latest earnings results.
Best Q3: National Vision (NASDAQ:EYE)
Operating under multiple brands, National Vision (NYSE:EYE) sells optical products such as eyeglasses and provides optical services such as eye exams.
National Vision reported revenues of $451.5 million, up 2.9% year on year. This print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
“We are encouraged by the progress we are making against key elements of our transformation, including completing the review of our store fleet, implementing new traffic-driving initiatives, continuing to expand exam capacity and remote exam efficiency, and benefiting from new perspectives through our deepened executive bench,” said Reade Fahs, National Vision’s CEO.
National Vision achieved the fastest revenue growth but had the weakest full-year guidance update of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 10.9% since reporting and currently trades at $10.88.
Is now the time to buy National Vision? Access our full analysis of the earnings results here, it’s free.
Petco (NASDAQ:WOOF)
Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ:WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.
Petco reported revenues of $1.51 billion, up 1.2% year on year, outperforming analysts’ expectations by 0.7%. The business performed better than its peers, but it was unfortunately a mixed quarter with a solid beat of analysts’ EPS estimates but EBITDA guidance for next quarter missing analysts’ expectations significantly.
Petco achieved the biggest analyst estimates beat among its peers. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 16.1% since reporting. It currently trades at $4.11.
Is now the time to buy Petco? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Leslie's (NASDAQ:LESL)
Named after founder Philip Leslie, who established the company in 1963, Leslie’s (NASDAQ:LESL) is a retailer that sells pool and spa supplies, equipment, and maintenance services.
Leslie's reported revenues of $397.9 million, down 8% year on year, falling short of analysts’ expectations by 1.8%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ gross margin estimates.
Leslie's delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 33.2% since the results and currently trades at $2.35.
Read our full analysis of Leslie’s results here.
Tractor Supply (NASDAQ:TSCO)
Started as a mail-order tractor parts business, Tractor Supply (NASDAQ:TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.
Tractor Supply reported revenues of $3.47 billion, up 1.6% year on year. This result was in line with analysts’ expectations. It was a satisfactory quarter as it also logged full-year EPS guidance exceeding analysts’ expectations.
Tractor Supply scored the highest full-year guidance raise among its peers. The stock is down 11.2% since reporting and currently trades at $51.93.
Read our full, actionable report on Tractor Supply here, it’s free.
Market Update
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 has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), 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 the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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