Guidewire Gears up for Q2 Earnings: Here's What Investors Should Know

Victoria's Secret & Co. VSCO is slated to release fourth-quarter 2024 results on March 5, after the closing bell.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 21.9%. VSCO surpassed earnings estimates in the trailing four quarters, the average beat being 10.3%, as shown in the chart below.

VSCO’s Q4 Earnings Estimate Revisions

The Zacks Consensus Estimate for fourth-quarter adjusted earnings is pegged at $2.30 per share, suggesting a 10.9% year-over-year decline. In the past seven days, earnings estimates for the quarter have been revised downward by 1 cent per share. For revenues, the consensus mark is pegged at $2.08 billion, suggesting a 0.1% year-over-year slip.

What the Zacks Model Unveils for VSCO

Our proven model predicts an earnings beat for Victoria's Secret this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

VSCO’s Earnings ESP: Victoria's Secret currently has an Earnings ESP of +0.01%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank of Victoria's Secret: The company carries a Zacks Rank #3 at present.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Influencing VSCO’s Q4 Performance

Victoria's Secret’s fourth-quarter performance is likely to have been aided by strong brand momentum, digital expansion and marketing initiatives. The company has likely benefited from strong sales momentum in North America, which carried over from the third quarter into the key holiday months of November and December. The consensus estimate for North America sales is pinned at $1.19 billion, implying 3% year-over-year growth.

On Jan. 29, the company said that it was pleased with its holiday results. It revealed that it experienced a notable increase in foot traffic to its physical stores and higher engagement on its digital platforms. This uptick is likely linked to an enhanced product assortment and the positive brand exposure generated by the Victoria’s Secret Fashion Show in late October.

VSCO is likely to have benefited from robust growth in the beauty segment, and strong performances in the sports bra segment and the PINK apparel category. The enhanced performance of the company’s customer loyalty program bodes well. However, softness in the intimate apparel market, as well as uncertain economic conditions, is likely to have negatively impacted the top line.

Conversely, the company’s bottom line in the quarter to be reported is likely to have been hurt by increased transportation costs and higher incentive compensation expenses.

Stock Price Performance & Valuation of VSCO

The VSCO stock has gained 2% over the past year, underperforming its industry. However, the company has outperformed other industry players like American Eagle Outfitters’ AEO 45.7% decline, The Buckle, Inc.’s BKE 2.8% dip and Capri Holdings’ CPRI 52% decrease.

VSCO Stock Price Performance

Consumer stocks were mixed Monday afternoon, with the Consumer Staples Select Sector SPDR Fund (XLP) increasing 0.6% and the Consumer Discretionary Select Sector SPDR Fund (XLY) shedding 1%.

In corporate news, Kroger Chief Executive Rodney McMullen resigned after an investigation found that his personal conduct was inconsistent with the supermarket chain's ethics policy. Kroger shares fell 2.4%.

Ford on Monday reported a year-over-year drop in US February sales amid weakness in the internal combustion component, though hybrid sales grew sharply. Its shares were down 0.2%.

Capri is nearing a deal to sell Versace to Prada for nearly 1.5 billion euros ($1.56 billion), Bloomberg reported over the weekend. Capri shares climbed nearly 6%.

The blue-chip DAX index closed Monday 2.64% higher, with defense stocks leading the gains ahead of a meeting by European leaders regarding increased defense spending amid recent geopolitical developments.

Rheinmetall was the index's top performer at 13.71% in the green while French jetmaker Airbus' German stock added 5.88%.

"With (Euro)150B+ potentially flooding into European defense budgets and arms contracts escalating, the sector is entering a structural bull cycle. This is more than just a rally-it's the dawn of a new growth phase for European defense," Baader Europe wrote. "The message is clear: defense is Europe's next big bet. Investors are positioning themselves early, sensing the long-term gains."

In economic news, Germany's factory activity remains in the contraction territory although the rate of declines in output, new orders and export sales slowed in February. The headline HCOB Germany Manufacturing PMI came in at 46.5 in February, above the previous 45 and the flash reading of 46.1.

"The outlook for the future is looking positive, though not as bright as at the beginning of the year. A lot will depend on how quickly a new government is formed and how bold their economic plans will be," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

On the corporate side, fashion luxury group Capri Holdings is reportedly nearing a deal to sell the Versace brand to its Italian peer Prada for up to 1.5 billion euros. The stock surged 8.67%.

The Gap, Inc. GAP is expected to register top and bottom-line declines when it reports fourth-quarter fiscal 2024 results on March 6, after the closing bell.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 36 cents per share, suggesting a 26.5% decline from the year-ago quarter’s reported figure. The consensus estimate for fiscal fourth-quarter earnings has been unchanged in the past 30 days. For revenues, the consensus mark is pegged at $4.1 billion, indicating a 5.4% rise from the year-ago quarter’s reported figure.

The San Francisco, CA-based company has been reporting steady earnings outcomes, as evident from its positive top and bottom-line surprise trends in the trailing four quarters. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 28.6%. GAP has a trailing four-quarter earnings surprise of 101.2%, on average. Given its positive record, the question is whether the stock can maintain its momentum.

Earnings Whispers for GAP

Our proven model conclusively predicts an earnings beat for Gap this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Gap currently has an Earnings ESP of +11.55% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

What to Expect From GAP’s Q4 Earnings: Key Trends

GAP’s fourth-quarter fiscal 2024 results are expected to reflect its ability to gain market share and revive its brand position. Management has been committed to creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda and efficiently controlling expenses. Gains from these actions are expected to have bolstered the company’s performance in fourth-quarter fiscal 2024.

Fueled by optimism around its holiday collection, Gap raised its fiscal 2024 outlook. In the fourth quarter of fiscal 2024, the company prioritized enhanced experiences for online and in-store shoppers by refreshing product imagery on its website and remodeling 15% of its stores. Gap was committed to executing with excellence in the fiscal fourth quarter.

Strong performances in the fiscal third quarter and the early fourth quarter positioned the company well for the holiday season. This has bolstered its confidence to raise its fiscal 2024 outlook for sales, gross margin and operating income growth. As a result, management forecast sales growth of 1.5-2% on a 52-week basis for fiscal 2024, implying fourth-quarter net sales growth of 1-2%.

The company’s fourth-quarter fiscal 2024 performance is expected to have gained from improved margins, driven by lower airfreight and increased promotional activity. Lower advertising expenses and technology investments from cost-saving actions bode well. The company has been aggressively undertaking cost-management actions, which are expected to have improved its performance in the to-be-reported quarter.

The Gap, Inc. Price and EPS Surprise

The Gap, Inc. price-eps-surprise | The Gap, Inc. Quote

On the last reported quarter’s earnings call, Gap anticipated the gross margin to expand at least 220 basis points (bps) year over year for fiscal 2024, including 100 bps of commodity cost gains realized in the first half of the fiscal year. This improvement was driven by commodity cost tailwinds in the first half of fiscal 2024, improved inventory management and relatively neutral ROD. In fourth-quarter fiscal 2024, the gross margin is expected to have been consistent with last year. Operating income for fiscal 2024 is projected to increase year over year in the mid-to-high 60%. This represents substantial progress toward restoring historical operating profit levels.

We expect the adjusted gross margin to expand 210 basis points for fiscal 2024. Our model projects adjusted operating income to surge 69.1% year over year in fiscal 2024, with an operating margin of 6.8%. Our model predicts year-over-year adjusted operating expenses to decline 7.1% for the fourth quarter and 1.1% in fiscal 2024.

Gap has been navigating an uncertain macroeconomic environment, including inflationary pressures and other challenges, which are expected to have impacted its top-line performance in the to-be-reported quarter. A decline in consumer confidence — a key economic indicator — could have further affected spending. Rising operating and SG&A expenses may put pressure on the company’s profitability for the fiscal fourth quarter.

Gap’s Price Performance & Valuation Look Promising

The company’s shares have exhibited an uptrend in the past year, rising 17.7%, leaving behind its industry peers and the S&P 500. In the past year, the apparel retailer’s shares have jumped 17.7%, outperforming the industry’s growth of 4.9% and the S&P 500’s rally of 17.1%. Meanwhile, the stock has underperformed the sector’s rise of 24% in the same period.

The Gap stock has displayed a significant rally compared with Deckers Outdoor DECK, American Eagle Outfitters Inc. AEO and Abercrombie & Fitch’s ANF declines of 9.7%, 45.7% and 25%, respectively, in the past year.

GAP's One-Year Price Performance

Abercrombie & Fitch Co. ANF is scheduled to report fourth-quarter fiscal 2024 results on March 5, before the opening bell.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The Zacks Consensus Estimate for ANF’s fiscal fourth-quarter revenues is pegged at $1.56 billion, suggesting 7.6% growth from that reported in the year-ago quarter. For fiscal fourth-quarter earnings, the consensus mark is pegged at $3.49 per share, implying a 17.5% increase from the $2.97 reported in the year-ago quarter. The consensus estimate for earnings has edged down by a penny in the past seven days.

In the last reported quarter, Abercrombie's earnings beat the consensus estimate by 7.8%. Moreover, ANF has delivered an earnings surprise of 14.8%, on average, in the trailing four quarters.

Earnings Whispers for ANF

Our proven model conclusively predicts an earnings beat for Abercrombie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Abercrombie currently has an Earnings ESP of +0.59% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Trends Leading Up to ANF’s Q4 Results

ANF has been gaining from continued momentum in the Abercrombie brand, improvement in the Hollister brand and store-optimization efforts. The company has noted that its efforts to improve the positioning of the Hollister brand have been paying off. Investments across stores, digital and technology via its Always Forward Plan bode well.

In January 2025, Abercrombie provided a positive business update, thanks to a robust performance in the holiday season. The company noted that its fiscal fourth-quarter through holiday season performance was ahead of management’s expectations issued in November.

Net sales growth for the period was driven by comparable sales (comps) across regions and brands in the holiday selling period. This is backed by the positive response to its exciting product assortments and engaging marketing.

Driven by a stellar holiday performance, management hiked the sales view for the fourth quarter and fiscal 2024 while reiterating the outlook for the other metrics. Robust customer-driven brands, relevant brand playbooks, major global growth opportunities leveraging capabilities in owned and operated channels, and a solid omnichannel base, coupled with a healthy balance sheet and a consistent free cash flow, are likely to boost growth.

Abercrombie & Fitch Company Price and EPS Surprise

Abercrombie & Fitch Company price-eps-surprise | Abercrombie & Fitch Company Quote

Management expects net sales growth of 7-8% for the fiscal fourth quarter. The operating margin for the fiscal fourth quarter is projected to be 16%. This guidance does not include the impacts of 550 basis points from the 53rd week and about 50 basis points from foreign currency. The company retained its operating margin view of 16% and the effective tax rate guidance in the high 20s for the fourth quarter of fiscal 2024.

For fiscal 2024, Abercrombie anticipates net sales growth of 15% compared with the previously mentioned 14-15%. Management expects an operating margin of 15% and an effective tax rate in the mid-20s for fiscal 2024. The sales outlook excludes the impacts of 120 basis points from the 53rd week.

Our model predicts fourth-quarter fiscal 2024 total revenues to increase 7.4% year over year. We expect sales for the Abercrombie brand to grow 6.6%. Sales for Hollister are expected to improve 8.2%.

However, Abercrombie has been witnessing elevated operating costs on higher technology expenses and incentive-based compensation. Additionally, inflation and increased investment for the 2025 Always Forward Plan initiatives are likely to have been concerning in the to-be-reported quarter. Our model estimates a year-over-year increase of 6% in adjusted operating expenses for the fiscal fourth quarter.

ANF’s Price Performance & Valuation

Abercrombie’s shares have exhibited a decline in the past year, underperforming its industry peers and the Zacks Retail-Wholesale sector. In the past year, the New Albany, OH-based company’s shares have declined 25% against the industry and the sector’s growth of 4.9% and 23.9%, respectively. The company has also lagged the S&P 500’s rally of 17.1%.

ANF’s One-Year Price Performance