The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Zumiez (NASDAQ: ZUMZ) and the rest of the apparel retailer stocks fared in Q4.
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 12.2% since the latest earnings results.
Zumiez (NASDAQ: ZUMZ)
With store associates called “Zumiez Stash Members”, Zumiez (NASDAQ: ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories.
Zumiez reported revenues of $279.2 million, flat year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a solid beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations significantly.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We delivered a substantial improvement in fourth quarter operating profitability driven by significant gross margin expansion and a meaningful reduction in operating expenses. Comparable sales increased by 5.9% led by North America and while choppy, represents continued progress in growing the top-line and bottom line. This unexpected choppiness is indicative of the environment we have been operating in for some time, and we expect it will continue. Our plan for 2025 is to stay the course and focus on executing the product and customer engagement initiatives that have fueled our third consecutive quarter of positive comps while staying nimble and financially flexible to deliver enhanced profitability. We have demonstrated our ability to navigate challenging cycles and emerge stronger and I am confident that Zumiez is on right course to repeat this accomplishment once again.”
Unsurprisingly, the stock is down 3.5% since reporting and currently trades at $12.31.
Read our full report on Zumiez here, it’s free.
Best Q4: Gap (NYSE: GAP)
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.
The market seems happy with the results as the stock is up 17.8% since reporting. It currently trades at $22.97.
Is now the time to buy Gap? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: 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 $1.58 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 24.5% since the results and currently trades at $72.56.
Read our full analysis of Abercrombie and Fitch’s results here.
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 $1.64 billion, up 9.4% year on year. This result met analysts’ expectations. Overall, it was a very strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ gross margin estimates.
The stock is down 3.5% since reporting and currently trades at $51.10.
Read our full, actionable report on Urban Outfitters here, it’s free.
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 number beat analysts’ expectations by 0.8%. Zooming out, it was a mixed quarter as it also logged an impressive beat of analysts’ EBITDA estimates but EPS guidance for next quarter missing analysts’ expectations significantly.
Lululemon pulled off the fastest revenue growth among its peers. The stock is down 17.3% since reporting and currently trades at $282.31.
Read our full, actionable report on Lululemon here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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