3 Retailers That Defied First Quarter Headwinds The takeaway from Q1 earnings for the retailers (NYSEARCA: XRT) is slowing growth and margin compression. Those factors have the sector down across verticals but not all retailers are feeling...

These Retailers Gave Positive Guidance For 2022

The takeaway from Q1 earnings for the retailers (NYSEARCA: XRT) is slowing growth and margin compression. Those factors have the sector down across verticals but not all retailers are feeling the same pain. Companies like Footlocker, V.F. Corporation, and Canada Goose were not only able to limit damage to their margins but provide a positive forecast for the year. While we can't promise conditions won't worsen, we can say these high-quality apparel manufacturers are defying the odds and producing results. In two cases, at least, these stocks also offer high yields above 5% and stock repurchases as well.

Footlocker Rises On Earnings Strength, Inventory Position

Footlocker (NYSE: FL) had a mixed quarter of that there is no doubt. While revenue grew 1.4% over last year to $2.18 billion it missed the consensus estimate by 135 basis points. The key takeaway from the report, however, is the margin which contracted by only 80 basis points. The analysts were looking for a figure well into the triple digits so this is a significant beat and the results can be seen on the bottom line. The adjusted EPS of $1.60 beat the Marketbeat.com consensus by $0.05 and the guidance is very optimistic. The company is expecting to see revenue and EPS come in at the upper end of the previously stated ranges of 4% to 6% and 8% to 10%. Assuming demand for products holds up over the summer, the inventory position and expected supply chain improvement should pave a path to outperformance as well.

"Following our solid results from the first quarter, our strong inventory position going into the remainder of the year, and our strengthening vendor relationships, based on our current visibility, we now expect to achieve the upper end of our revenue and earnings guidance for the full year," said Footlocker CFO Andrew Page.

V.F. Corporation Rises On Mixed Results

V.F. Corporation's (NYSE: VFC) calendar Q1/fiscal Q4 results were more mixed than Footlocker's but equally skewed to the upside. The owner of Vans and The North Face reported slim misses on both the top and bottom line but was able to successfully navigate the inflationary environment. While gross margin contracted by less than 100 basis points the decline was offset by a 210 bps improvement in GAAP operating margin and a 70 bps improvement in the adjusted margin.

In light of the fact most segments outside of pandemically restricted Asia grew by double-digits, we think the 9.3% growth in revenue and earnings performance is pretty good. Looking forward, the company is expecting revenue growth in the range of 7% this year with significant margin expansion at the gross and operating levels. The operating margin is expected to nearly double in fiscal 2023 and will provide ample cash flow and FCF to fuel the buyback program and the 4.5% yield.

Canada Goose Flies North On Positive Guidance

Canada Goose (TSE: GOOS) had a good quarter and provided positive guidance for the year sending its shares up on the news. The company was able to grow revenue by 1.4% (6.8% FX neutral) on top of last year's 64% increase to set a quarterly record. The revenue missed the consensus but by a very slim 16 basis points and margins were better than expected so we aren't too concerned about that. The operating margin narrowed by 300 basis points but far less than what was expected due to pricing increases and channel mix. DTC sales increased by nearly 28% on a comp basis while bulk sales shifted to wholesalers and away from international distributors. The best news in the report, however, is the guidance which is expecting Q1 strength to carry into the end of the year. The company is expecting revenue in a range with the marketbeat.com consensus near the bottom and for EBIT margin near 19%.