As Q3 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers amongst the apparel and footwear retail stocks, including Foot Locker (NYSE:FL) and its peers.
Apparel and footwear was once a category thought to be relatively safe from major e-commerce penetration because of the need to try on, touch, and feel products, but the category is now meaningfully transacted online. Everyone still needs clothes and shoes to go outside unless they want some curious (or horrified) looks. But this ongoing digitization is forcing apparel and footwear retailers–that once only had brick-and-mortar stores–to respond with omnichannel offerings. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stagnate, so the evolution of clothing and shoes sellers marches on.
The 18 apparel and footwear retail stocks we track reported a decent Q3; on average, revenues beat analyst consensus estimates by 1.8% while next quarter's revenue guidance was 2.1% above consensus. Valuation multiples for growth stocks have reverted to their historical means after reaching highs in early 2021, but apparel and footwear retail stocks held their ground better than others, with the share prices up 10.3% on average since the previous earnings results.
Foot Locker (NYSE:FL)
Known for store associates whose uniforms resemble those of referees, Foot Locker (NYSE:FL) is a specialty retailer that sells athletic footwear, clothing, and accessories.
Foot Locker reported revenues of $1.99 billion, down 8.5% year on year, topping analyst expectations by 1.6%. It was a strong quarter for the company, with an impressive beat of analysts' earnings estimates and optimistic earnings guidance for the full year.
Mary Dillon, President and Chief Executive Officer, said, "We delivered third quarter results that were ahead of our expectations as strong execution and early progress against our Lace Up plan improved conversion trends across channels. Looking forward, we are updating our outlook to reflect the momentum we have in our strategic initiatives into the fourth quarter, which includes strong results over the Thanksgiving week period, against the backdrop of ongoing consumer uncertainty. As such, we are narrowing our 2023 outlook and still expect to end the year with inventory levels flat to down slightly, as compared with the prior year."
Foot Locker Total Revenue
The stock is up 22.8% since the results and currently trades at $29.28.
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 $3.77 billion, down 6.7% year on year, outperforming analyst expectations by 4.4%. It was an incredible quarter for the company, with a solid beat of analysts' earnings estimates and an impressive beat of analysts' gross margin estimates.
Gap Total Revenue
The stock is up 52.2% since the results and currently trades at $20.79.
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE:DBI) is an American discount retailer focused on footwear and accessories.
Designer Brands reported revenues of $786.3 million, down 9.1% year on year, falling short of analyst expectations by 4.4%. It was a weak quarter for the company, with underwhelming earnings guidance for the full year and a miss of analysts' revenue estimates.
Designer Brands had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is down 29.9% since the results and currently trades at $8.98.
With a focus on small and mid-sized markets, Hibbett (NASDAQ:HIBB) is a specialty retailer that sells athletic apparel and footwear as well as select sports equipment.
Hibbett reported revenues of $431.9 million, down 0.3% year on year, surpassing analyst expectations by 3.7%. It was an exceptional quarter for the company, with an impressive beat of analysts' earnings estimates and optimistic earnings guidance for the full year.
The stock is up 25.2% since the results and currently trades at $67.1.
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 $275.4 million, down 5% year on year, surpassing analyst expectations by 12%. It was a very strong quarter for the company, with an impressive beat of analysts' revenue estimates and full-year revenue guidance exceeding analysts' expectations.
Torrid pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 41% since the results and currently trades at $5.88.
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The author has no position in any of the stocks mentioned
