Q3 Earnings Roundup: Ross Stores (NASDAQ:ROST) And The Rest Of The Apparel and Footwear Retail Segment

As apparel and footwear retail stocks’ Q3 earnings season wraps, let's dig into this quarter's best and worst performers, including Ross Stores (NASDAQ:ROST) 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. Stocks have been under pressure as inflation (despite slowing) makes their long-dated profits less valuable, but apparel and footwear retail stocks held their ground better than others, with the share prices up 7.5% on average since the previous earnings results.

Ross Stores (NASDAQ:ROST)

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Ross Stores reported revenues of $4.92 billion, up 7.9% year on year, topping analyst expectations by 1.8%. It was an ok quarter for the company, with a decent beat of analysts' revenue estimates. On the other hand, its earnings forecast for next quarter missed analysts' expectations with management expecting decelerating same-store sales growth thanks to the uncertain macro environment.

Barbara Rentler, Chief Executive Officer, commented, “We are pleased that both sales and earnings outperformed our expectations for the quarter as customers responded favorably to the terrific values we offered throughout our stores. Operating margin for the period was 11.2%, up from 9.8% last year, as leverage from the same store sales gain and lower freight costs was partially offset by higher incentives and store wages.”

The stock is up 14.7% since the results and currently trades at $137.78.

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

Best Q3: Gap (NYSE:GPS)

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 an impressive beat of analysts' earnings estimates.

The stock is up 35.7% since the results and currently trades at $18.53.

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

Weakest Q3: 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 $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.

Designer Brands had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is down 35.5% since the results and currently trades at $8.26.

Read our full analysis of Designer Brands's results here.

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 $319.9 million, down 6.4% year on year, falling short of analyst expectations by 0.4%. It was a weak quarter for the company, with underwhelming earnings guidance for the full year and a miss of analysts' earnings estimates.

The stock is up 5.5% since the results and currently trades at $25.53.

Read our full, actionable report on Shoe Carnival here, it's free.

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 $275.4 million, down 8.3% year on year, surpassing analyst expectations by 12%. It was an exceptional quarter for the company, with an impressive beat of analysts' revenue estimates.

Torrid pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 42% since the results and currently trades at $5.92.

Read our full, actionable report on Torrid here, it's free.

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The author has no position in any of the stocks mentioned