Firing on All Cylinders: American Eagle (NYSE:AEO) Q2 Earnings Lead the Way

Let’s dig into the relative performance of American Eagle (NYSE:AEO) and its peers as we unravel the now-completed Q2 apparel retailer earnings season.

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 strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was 0.5% below.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Best Q2: 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 $1.28 billion, flat year on year. This print exceeded analysts’ expectations by 4%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS estimates and a solid beat of analysts’ gross margin estimates.

“We were pleased to see an improvement in the business during the second quarter driven by higher demand, lower promotions and well-managed expenses, all of which exceeded our expectations,” said Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer,

Interestingly, the stock is up 32% since reporting and currently trades at $18.

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

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 $214.3 million, up 1.9% year on year, outperforming analysts’ expectations by 1.4%. The business had an exceptional quarter with EPS guidance for the next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates.

The market seems happy with the results as the stock is up 8.2% since reporting. It currently trades at $19.97.

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

Weakest Q2: Torrid (NYSE:CURV)

Promoting a message of body positivity and inclusiveness, Torrid Holdings (NYSE:CURV) is a plus-size women’s apparel and accessories retailer.

Torrid reported revenues of $262.8 million, down 7.7% year on year, exceeding analysts’ expectations by 0.9%. Still, it was a softer quarter as it posted full-year EBITDA guidance missing analysts’ expectations.

Torrid delivered the slowest revenue growth in the group. As expected, the stock is down 25.9% since the results and currently trades at $1.77.

Read our full analysis of Torrid’s results here.

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 $3.73 billion, flat year on year. This number met analysts’ expectations. Zooming out, it was a satisfactory quarter as it also produced an impressive beat of analysts’ EBITDA estimates but a miss of analysts’ gross margin estimates.

The stock is up 1.5% since reporting and currently trades at $21.99.

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

Victoria's Secret (NYSE:VSCO)

Spun off from L Brands in 2020, Victoria’s Secret (NYSE:VSCO) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances.

Victoria's Secret reported revenues of $1.46 billion, up 3% year on year. This result topped analysts’ expectations by 4%. Overall, it was a very strong quarter as it also put up a beat of analysts’ EPS and EBITDA estimates.

Victoria's Secret scored the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 15.6% since reporting and currently trades at $26.32.

Read our full, actionable report on Victoria's Secret here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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