Quarterly earnings results are an excellent opportunity to evaluate a company’s progress, particularly when compared to its peers in the same sector. In this article, we will examine Sally Beauty (NYSE:SBH) and the top and worst performers in the specialty retail industry.
What is Specialty Retail?
Specialty retailers focus on selling a narrow category of products and strive to excel at it. Unlike general merchandise stores that attempt to sell everything under the sun, these retailers specialize in a specific area, such as eyeglasses, sporting goods, or beauty and cosmetics. Their success depends on providing depth of product within their category and offering exceptional in-store expertise and guidance for customers who require it.
E-commerce Competition and Waning Retail Foot Traffic
Specialty retailers face significant challenges from e-commerce competition and declining retail foot traffic. However, the magnitude of these headwinds varies depending on the products they sell and the additional value they provide to their customers within their stores.
Q3 Earnings Review for Specialty Retail Stocks
The 8 specialty retail stocks we track reported satisfactory Q3 earnings results as a group. Their revenues exceeded analysts’ consensus estimates by 0.5%, while next quarter’s revenue guidance was in line with expectations.
Fortunately, the share prices of these companies have been resilient, increasing an average of 5.5% since the latest earnings results.
Sally Beauty (NYSE:SBH)
Sally Beauty caters to both everyday consumers and salon professionals by offering salon-quality beauty products such as makeup and haircare products.
In Q3, Sally Beauty reported revenues of $935 million, a 1.5% year-over-year increase that met analysts’ expectations. The company’s overall performance was satisfactory, with a decent beat of analysts’ EBITDA estimates.
"We are pleased to conclude our fiscal year with strong fourth quarter results, reflecting continued momentum across both our Sally Beauty and Beauty Systems Group segments," said Denise Paulonis, president and chief executive officer of Sally Beauty.
Sally Beauty’s stock price has decreased by 15.3% since reporting Q3 earnings and currently trades at $10.61.
Is now the time to buy Sally Beauty?
Access our full analysis of the earnings results here for free.
Best Q3: Sportsman’s Warehouse (NASDAQ:SPWH)
Sportsman’s Warehouse is an American specialty retailer offering a diverse range of active gear, equipment, and apparel for individuals passionate about hunting, fishing, camping, hiking, shooting sports, and more.
In Q3, Sportsman’s Warehouse reported revenues of $324.3 million, a 4.8% year-over-year decrease that outperformed analysts’ expectations by 7.9%. The company had an impressive quarter with significant beats of analysts’ estimates for EBITDA and revenue growth.
Sportsman’s Warehouse achieved the fastest revenue growth among its peers in Q3. The stock price is up 19.1% since reporting and currently trades at $36.60.
Read our full, actionable report on Sportsman’s Warehouse here for free.
Worst Performer: Best Buy (NYSE:BBY)
Best Buy reported revenues of $9.45 billion in Q3, a 3.2% year-over-year decrease that fell 2% short of analysts’ expectations. The company had a slower quarter with misses on EBITDA estimates and full-year EPS guidance.
The stock price is down 9.4% since reporting Q3 earnings and currently trades at $84.27.
Read our full, actionable report on Best Buy here for free.
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 has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs.
However, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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