Spotting Winners: National Vision (NASDAQ:EYE) And Specialty Retail Stocks In Q2
As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the specialty retail industry, including National Vision (NASDAQ:EYE) and its peers.
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.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Thankfully, specialty retail stocks have been resilient with share prices up 9.9% on average since the latest earnings results.
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. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with an impressive beat of analysts’ earnings estimates but underwhelming earnings guidance for the full year.
“Comparable store sales growth in the second quarter improved sequentially from the first quarter largely due to increased traffic,” said Reade Fahs, National Vision’s CEO.
National Vision achieved the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 5.1% since reporting and currently trades at $275.95.
Read our full report on National Vision 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 5.1% since reporting. It currently trades at $275.95.
Is now the time to buy Tractor Supply? Access our full analysis of the earnings results here, it’s free.
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, in line with analysts’ expectations. It was a slower quarter as it posted underwhelming earnings guidance for the full year.
Leslie's delivered the highest full-year guidance raise but had the slowest revenue growth in the group. Interestingly, the stock is up 4.7% since the results and currently trades at $2.88.
Read our full analysis of Leslie’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 result was in line with analysts’ expectations. More broadly, it was a mixed quarter as it also logged a decent beat of analysts’ earnings estimates but underwhelming earnings guidance for the next quarter.
The stock is up 52.6% since reporting and currently trades at $4.70.
Read our full, actionable report on Petco here, it’s free.
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