As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the specialty retail industry, including Academy Sports (NASDAQ:ASO) 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 9 specialty retail stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 2.7%.
Thankfully, share prices of the companies have been resilient as they are up 5.1% on average since the latest earnings results.
Academy Sports (NASDAQ:ASO)
Founded in 1938 as a tire shop before expanding into fishing equipment, Academy Sports & Outdoor (NASDAQ:ASO) sells a broad selection of sporting goods but is still known for its outdoor activity merchandise.
Academy Sports reported revenues of $1.38 billion, up 3% year on year. This print fell short of analysts’ expectations by 1.3%, but it was still a satisfactory quarter for the company with a solid beat of analysts’ gross margin estimates but a slight miss of analysts’ revenue estimates.
"We continue to see an acceleration in our underlying growth strategies, despite the uncertain economic backdrop the consumer is facing," said Steve Lawrence, Chief Executive Officer.
Academy Sports pulled off the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 12.6% since reporting and currently trades at $55.01.
Is now the time to buy Academy Sports? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Ulta (NASDAQ:ULTA)
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ:ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Ulta reported revenues of $2.86 billion, up 12.9% year on year, outperforming analysts’ expectations by 5.2%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ revenue estimates.
Ulta scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 12% since reporting. It currently trades at $600.22.
Is now the time to buy Ulta? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Dick's (NYSE:DKS)
Started as a hunting supply store, Dick’s Sporting Goods (NYSE:DKS) is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.
Dick's reported revenues of $4.17 billion, up 36.3% year on year, falling short of analysts’ expectations by 10.2%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.
Dick's delivered the fastest revenue growth but had the weakest full-year guidance update in the group. Interestingly, the stock is up 6.4% since the results and currently trades at $219.46.
Read our full analysis of Dick’s results here.
Sportsman's Warehouse (NASDAQ:SPWH)
A go-to destination for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more, Sportsman's Warehouse (NASDAQ:SPWH) is an American specialty retailer offering a diverse range of active gear, equipment, and apparel.
Sportsman's Warehouse reported revenues of $331.3 million, up 2.2% year on year. This print was in line with analysts’ expectations. Taking a step back, it was a slower quarter as it recorded full-year EBITDA guidance missing analysts’ expectations significantly.
The stock is down 33.2% since reporting and currently trades at $1.63.
Read our full, actionable report on Sportsman's Warehouse here, it’s free for active Edge members.
Best Buy (NYSE:BBY)
With humble beginnings as a stereo equipment seller, Best Buy (NYSE:BBY) now sells a broad selection of consumer electronics, appliances, and home office products.
Best Buy reported revenues of $9.67 billion, up 2.4% year on year. This number topped analysts’ expectations by 1%. It was a strong quarter as it also produced a solid beat of analysts’ EBITDA estimates and a narrow beat of analysts’ revenue estimates.
The stock is down 2% since reporting and currently trades at $74.10.
Read our full, actionable report on Best Buy here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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