Affirm (AFRM)
Shares rallied about 15%, climbing toward 16% higher, on results that beat estimates on both the top and bottom line. Revenue rose 33% to $1.17 billion, above the $1.11 billion expected. Adjusted earnings came in at $0.48 per share, better than expected. Analysts raised price targets.
Gross Merchandise Volume (GMV) - the total dollar value of transactions running through the platform - jumped 36% to $14.1 billion, beating estimates. Direct merchant partnerships drove about half of that growth. GMV shows how much people actually use the service, and its 36% rise means transaction volume is growing faster than revenue, a positive sign for adoption and engagement. Active consumers rose 21%, and transactions per active consumer also rose by double digits.
The company set a target of reaching $100 billion in annual GMV by the end of the decade, and the momentum looks in place. It is expanding abroad, partnering with Shopify (SHOP) to launch Shop Pay installments in Australia.
Gap (GAP) and Old Navy
Shares rallied more than 20%, driven largely by a leadership change at Old Navy. Adjusted earnings met expectations at $0.52 per share, above the $0.48 the street wanted. Revenue missed at $3.65 billion versus $3.69 billion expected. Comparable sales (comps) fell 1%.
The company narrowed its full-year sales growth forecast to 1% to 1.5% but raised adjusted earnings guidance to $2.35 to $2.45 per share.
Old Navy was the main worry going in. Its comps fell 4%, worse than Wall Street expected. Old Navy matters because it makes almost 60% of Gap's total revenue and has led all the company's brands, ahead of the namesake Gap brand and others. The company says traffic and sales have improved a lot. Michael Francis, currently chief customer officer, becomes the new Old Navy CEO starting November 2. Wall Street liked the move. UBS put a buy rating and a $42 target on the stock, up from $40; shares trade at $24.
Ulta Beauty (ULTA)
Shares fell about 1% despite a stronger-than-expected second quarter. Earnings came in at $6.55 per share, above the $6.16 expected. Revenue topped $3 billion at $3.04 billion, above the $2.96 billion expected. Beauty spending stays firm even as shoppers grow more selective across retail.
The company raised full-year earnings guidance to $28.70 to $29 per share, up from its prior range, and lifted its annual sales growth forecast to 6.7% to 7.2%. Management pointed to product innovation, value, and convenience, but that did not lift the shares. Why the stock is under pressure despite the beat and raised guidance is not clear from the results.
