The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how specialty retail stocks fared in Q2, starting with Petco (NASDAQ:WOOF).
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.
While some specialty retail stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.5% since the latest earnings results.
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 print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with a beat of analysts’ EPS and EBITDA estimates.
"For the second quarter we once again delivered against our commitments, enabling us to raise our earnings outlook for the full year. The first half of this year established a solid foundation for our transformation as we continued to strengthen our economic model and improve retail operating fundamentals," said Joel Anderson, Petco's Chief Executive Officer.
Interestingly, the stock is up 18% since reporting and currently trades at $3.81.
Is now the time to buy Petco? Access our full analysis of the earnings results 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 happy with the results as the stock is up 12.4% since reporting. It currently trades at $27.92.
Is now the time to buy National Vision? Access our full analysis of the earnings results here, it’s free for active Edge members.
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, falling short of analysts’ expectations by 4.7%. It was a softer quarter as it posted full-year EBITDA guidance missing analysts’ expectations and a significant miss of analysts’ revenue estimates.
Leslie's 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 38.8% since the results and currently trades at $4.48.
Read our full analysis of Leslie’s results here.
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. This print surpassed analysts’ expectations by 0.9%. Overall, it was a satisfactory quarter as it also produced a narrow beat of analysts’ revenue estimates.
The stock is down 9.5% since reporting and currently trades at $53.95.
Read our full, actionable report on Tractor Supply here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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