Dj Gap Inc Price Target Raised To $32.00/Share From $29.00 By Goldman Sachs

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 Gap and the rest of the apparel retailer stocks fared in Q3.

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 very strong Q3. As a group, revenues beat analysts’ consensus estimates by 2% while next quarter’s revenue guidance was in line.

Thankfully, share prices of the companies have been resilient as they are up 8.4% on average since the latest earnings results.

Gap

Operating under the Gap, Old Navy, Banana Republic, and Athleta brands, Gap is an apparel and accessories retailer selling casual clothing to men, women, and children.

Gap reported revenues of $3.94 billion, up 3% year on year. This print exceeded analysts’ expectations by 0.8%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ gross margin estimates.

"We are proud to report that Gap Inc.'s third quarter results exceeded our net sales and margin expectations and delivered the seventh consecutive quarter of positive comparable sales," said President and Chief Executive Officer, Richard Dickson.

Interestingly, the stock is up 16.5% since reporting and currently trades at $26.88.

Best Q3: Zumiez

With store associates called “Zumiez Stash Members”, Zumiez is a specialty retailer of street and skate apparel, footwear, and accessories.

Zumiez reported revenues of $239.1 million, up 7.5% year on year, outperforming analysts’ expectations by 2%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 9.5% since reporting. It currently trades at $24.67.

Weakest Q3: Torrid

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

Torrid reported revenues of $235.2 million, down 10.8% year on year, falling short of analysts’ expectations by 2%. It was a disappointing quarter as it posted full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.

Torrid delivered the highest full-year guidance raise but had the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 7.3% since the results and currently trades at $1.22.

Read our full analysis of Torrid’s results here.

American Eagle

With a heavy focus on denim, American Eagle Outfitters is a specialty retailer offering an assortment of apparel and accessories to young adults.

American Eagle reported revenues of $1.36 billion, up 5.7% year on year. This print beat analysts’ expectations by 3.1%. Overall, it was an exceptional quarter as it also put up a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.

The stock is up 10.6% since reporting and currently trades at $23.05.

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

Urban Outfitters

Founded as a purveyor of vintage items, Urban Outfitters now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.

Urban Outfitters reported revenues of $1.53 billion, up 12.3% year on year. This number topped analysts’ expectations by 2.6%. It was a very strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ revenue estimates.

Urban Outfitters delivered the fastest revenue growth among its peers. The stock is up 1.9% since reporting and currently trades at $69.60.

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

Let’s dig into the relative performance of American Eagle and its peers as we unravel the now-completed Q3 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 very strong Q3. As a group, revenues beat analysts’ consensus estimates by 2% while next quarter’s revenue guidance was in line.

Luckily, apparel retailer stocks have performed well with share prices up 13.1% on average since the latest earnings results.

American Eagle

With a heavy focus on denim, American Eagle Outfitters is a specialty retailer offering an assortment of apparel and accessories to young adults.

American Eagle reported revenues of $1.36 billion, up 5.7% year on year. This print exceeded analysts’ expectations by 3.1%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ revenue estimates.

“I’m extremely pleased with the significant trend change across our business reflecting decisive steps taken from merchandising to marketing to operations—all having a positive impact. Record third quarter revenue was highlighted by Aerie’s double-digit comparable sales increase and positive growth at American Eagle, contributing to results that exceeded expectations,” commented Jay Schottenstein, Executive Chairman of the Board and Chief Executive Officer, AEO Inc.

Interestingly, the stock is up 22.9% since reporting and currently trades at $25.70.

Best Q3: Zumiez

With store associates called “Zumiez Stash Members”, Zumiez is a specialty retailer of street and skate apparel, footwear, and accessories.

Zumiez reported revenues of $239.1 million, up 7.5% year on year, outperforming analysts’ expectations by 2%. The business had an exceptional quarter with a beat of analysts’ EPS and EBITDA estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 7.1% since reporting. It currently trades at $25.34.

Weakest Q3: Torrid

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

Torrid reported revenues of $235.2 million, down 10.8% year on year, falling short of analysts’ expectations by 2%. It was a disappointing quarter as it posted full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.

Torrid delivered the highest full-year guidance raise but had the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 6.2% since the results and currently trades at $1.20.

Read our full analysis of Torrid’s results here.

Gap

Operating under the Gap, Old Navy, Banana Republic, and Athleta brands, Gap is an apparel and accessories retailer selling casual clothing to men, women, and children.

Gap reported revenues of $3.94 billion, up 3% year on year. This result beat analysts’ expectations by 0.8%. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ gross margin estimates.

The stock is up 13.4% since reporting and currently trades at $26.12.

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

Victoria's Secret

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

Victoria's Secret reported revenues of $1.47 billion, up 9.2% year on year. This number topped analysts’ expectations by 4.5%. It was an exceptional quarter as it also recorded a beat of analysts’ EPS estimates and a solid beat of analysts’ gross margin estimates.

Victoria's Secret pulled off the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is up 49.5% since reporting and currently trades at $62.16.

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