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 Leslie's (NASDAQ:LESL) and the rest of the specialty retail stocks fared in Q2.
Some retailers try to sell everything under the sun, while others—appropriately called Specialty Retailers—focus on selling a narrow category and aiming to be exceptional at it. Whether it’s eyeglasses, sporting goods, or beauty and cosmetics, these stores win with depth of product in their category as well as in-store expertise and guidance for shoppers who need it. E-commerce competition exists and waning retail foot traffic impacts these retailers, but the magnitude of the headwinds depends on what they sell and what extra value they provide in their stores.
The 4 specialty retail stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 0.6% below.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. Luckily, specialty retail stocks have performed well with share prices up 12.4% on average since the latest earnings results.
Slowest Q2: Leslie's (NASDAQ:LESL)
Named after founder Philip Leslie, who established the company in 1963, Leslie’s (NASDAQ:LESL) is a retailer that sells pool and spa supplies, equipment, and maintenance services.
Leslie's reported revenues of $569.6 million, down 6.8% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with full-year revenue guidance missing analysts’ expectations.
Mike Egeck, Chief Executive Officer, said, “As we noted in our preliminary results on July 17, our fiscal third quarter results were impacted by a cold and wet start to the pool season, as well as continued weakness in discretionary product sales due to persistent inflation and high interest rates. As weather improved in June, we saw positive trends relative to the overall quarter, including improvements in total sales, chemical sales, and Pro and Hot Tub sales. The combination of these improvements, together with third-party credit card data indicating that our sales performance was better than the industry for the quarter, and that we gained market share in June, are encouraging signs for the business.”
Leslie's scored the highest full-year guidance raise but had the slowest revenue growth of the whole group. The stock is up 6.2% since reporting and currently trades at $2.92.
Read our full report on Leslie's here, it’s free.
Best Q2: Tractor Supply (NASDAQ:TSCO)
Started as a mail-order tractor parts business, Tractor Supply (NASDAQ:TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.
Tractor Supply reported revenues of $4.25 billion, up 1.5% year on year, in line with analysts’ expectations. The business had a satisfactory quarter with optimistic earnings guidance for the full year but a miss of analysts’ gross margin estimates.
The market seems happy with the results as the stock is up 5.5% since reporting. It currently trades at $277.01.
Is now the time to buy Tractor Supply? Access our full analysis of the earnings results here, it’s free.
National Vision (NASDAQ:EYE)
Operating under multiple brands, National Vision (NYSE:EYE) sells optical products such as eyeglasses and provides optical services such as eye exams.
National Vision reported revenues of $451.7 million, up 4.6% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted an impressive beat of analysts’ earnings estimates but underwhelming earnings guidance for the full year.
National Vision delivered the weakest full-year guidance update in the group. As expected, the stock is down 20.7% since the results and currently trades at $11.07.
Read our full analysis of National Vision’s results here.
Petco (NASDAQ:WOOF)
Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ:WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.
Petco reported revenues of $1.52 billion, flat year on year. This print met analysts’ expectations. Aside from that, it was a mixed quarter as it also produced a decent beat of analysts’ earnings estimates but underwhelming earnings guidance for the next quarter.
The stock is up 58.8% since reporting and currently trades at $4.89.
Read our full, actionable report on Petco here, it’s free.
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