Q3 Earnings Outperformers: Designer Brands (NYSE:DBI) And The Rest Of The Apparel and Footwear Retail Stocks

Let’s dig into the relative performance of Designer Brands (NYSE:DBI) and its peers as we unravel the now-completed Q3 apparel and footwear retail earnings season.

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 12 apparel and footwear retail stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 0.5% below.

Luckily, apparel and footwear retail stocks have performed well with share prices up 23% on average since the latest earnings results.

Designer Brands (NYSE:DBI)

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 $752.4 million, down 3.2% year on year. This print fell short of analysts’ expectations by 1.4%, but it was still a very strong quarter for the company with a beat of analysts’ EPS and gross margin estimates.

"Our third quarter performance represents another meaningful step forward in our transformation, as we demonstrated continued sequential improvement across multiple financial and operating metrics," stated Doug Howe, Chief Executive Officer.

The stock is up 78.7% since reporting and currently trades at $8.67.

Is now the time to buy Designer Brands? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: 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 $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.

The market seems happy with the results as the stock is up 10.1% since reporting. It currently trades at $30.

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

Weakest Q3: 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 $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 24.9% since the results and currently trades at $0.96.

Read our full analysis of Torrid’s results here.

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 $1.53 billion, up 12.3% year on year. This print topped analysts’ expectations by 2.6%. Overall, it was a very strong 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 20.3% since reporting and currently trades at $82.17.

Read our full, actionable report on Urban Outfitters here, it’s free for active Edge members.

Shoe Carnival (NASDAQ:SCVL)

Known for its playful atmosphere that features carnival elements, Shoe Carnival (NASDAQ:SCVL) is a retailer that sells footwear from mainstream brands for the entire family.

Shoe Carnival reported revenues of $297.2 million, down 3.2% year on year. This number beat analysts’ expectations by 0.7%. It was a very strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.

The stock is up 18.1% since reporting and currently trades at $19.73.

Read our full, actionable report on Shoe Carnival here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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