As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at specialty retail stocks, starting with Leslie's (NASDAQ: LESL).
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 satisfactory Q2. As a group, revenues were in line with analysts’ consensus estimates.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 10.7% since the latest earnings results.
Weakest 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 $500.3 million, down 12.2% year on year. This print fell short of analysts’ expectations by 4.7%. Overall, it was a softer quarter for the company with full-year EBITDA guidance missing analysts’ expectations and a significant miss of analysts’ revenue estimates.
“As we announced last month in our preliminary financial results, our results were below expectations in the fiscal third quarter. Against a challenging backdrop in what is normally our peak selling season of the year, we faced significant headwinds from weather in addition to competitive pricing dynamics that were magnified in a compressed demand period,” said Jason McDonell, Leslie’s chief executive officer.
Leslie's pulled off the highest full-year guidance raise but had the weakest performance against analyst estimates and weakest performance against analyst estimates of the whole group. Still, the market seems discontent with the results. The stock is down 3.9% since reporting and currently trades at $3.77.
Read our full report on Leslie's here, it’s free for active Edge members.
Best Q2: 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 $486.4 million, up 7.7% year on year, outperforming analysts’ expectations by 3.5%. The business had an exceptional quarter with a beat of analysts’ EPS and EBITDA estimates.
National Vision delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems content with the results as the stock is up 3.9% since reporting. It currently trades at $25.81.
Is now the time to buy National Vision? Access our full analysis of the earnings results here, it’s free for active Edge members.
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 $4.44 billion, up 4.5% year on year, exceeding analysts’ expectations by 0.9%. It was a satisfactory quarter as it also posted a narrow beat of analysts’ revenue estimates.
As expected, the stock is down 6.6% since the results and currently trades at $55.70.
Read our full analysis of Tractor Supply’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 $1.49 billion, down 2.3% year on year. This number was in line with analysts’ expectations. Overall, it was a very strong quarter as it also produced a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
The stock is up 8.4% since reporting and currently trades at $3.50.
Read our full, actionable report on Petco here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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