Firing on All Cylinders: Urban Outfitters (NASDAQ:URBN) Q1 Earnings Lead the Way

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how apparel retailer stocks fared in Q1, starting with Urban Outfitters (NASDAQ:URBN).

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 1.4% since the latest earnings results.

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. This print exceeded analysts’ expectations by 2.5%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.

“We are excited to announce record first quarter revenues and profits,” said Richard A. Hayne, Chief Executive Officer.

Urban Outfitters achieved the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 30.4% since reporting and currently trades at $77.77.

Is now the time to buy Urban Outfitters? Access our full analysis of the earnings results here, it’s free.

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 $3.46 billion, up 2.2% year on year, outperforming analysts’ expectations by 1.3%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ EPS estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 29.9% since reporting. It currently trades at $19.60.

Is now the time to buy Gap? 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 estimates and a significant miss of analysts’ EPS estimates.

Interestingly, the stock is up 1.7% since the results and currently trades at $11.37.

Read our full analysis of American Eagle’s results here.

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 $107.6 million, down 7.1% year on year. This number missed analysts’ expectations by 0.5%. It was a slower quarter as it also logged a significant miss of analysts’ EBITDA estimates and EPS guidance for next quarter missing analysts’ expectations significantly.

Tilly's had the slowest revenue growth among its peers. The stock is up 44.4% since reporting and currently trades at $1.92.

Read our full, actionable report on Tilly's 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 $2.37 billion, up 7.3% year on year. This print was in line with analysts’ expectations. Taking a step back, it was a slower quarter as it logged EPS guidance for next quarter missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations.

The stock is down 37.6% since reporting and currently trades at $206.

Read our full, actionable report on Lululemon 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 thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), 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 potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

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