What happened

Shares of major apparel companies popped today after Pfizer and BioNTech announced that their coronavirus vaccine candidate is producing encouraging results with an estimated effectiveness rate of 90%. The development represents a meaningful step toward ending the COVID-19 pandemic that has upended the economy and hurt consumer discretionary spending and forced widespread closures of retail stores.

Here's how several prominent apparel retailers closed out the session:

So what

All of the companies operate retail stores, distribute products through third-party retailers, or both. Brick-and-mortar stores have been significantly impacted throughout the year due to various lockdown orders as governments attempted to limit the spread of the coronavirus, and rising COVID-19 cases around the world have sparked fears in recent weeks that more restrictions could be implemented.

Masked man wearing a backpack and browsing through T-shirts in a clothing store

Image source: Getty Images.

Gap hosted a virtual event in late October to provide investors with an update on market conditions. The company has been focusing on its e-commerce efforts to accommodate evolving consumer preferences, and Gap believes that it has an opportunity to expand its market share with its portfolio of brands that includes Old Navy and Banana Republic. Gap estimates that it is the No. 2 apparel brand and No. 6 apparel retailer in the U.S.

Gap has not yet reported third-quarter results but expects revenue to improve sequentially thanks to "meaningful online sales growth coupled with continued recovery following the reopening of our stores," according to CFO Katrina O'Connell.

American Eagle Outfitters saw second-quarter revenue fall by 15% but similarly continues to pivot to online sales while reopening stores. "The top line strengthened as stores successfully reopened, the digital channel accelerated, and Aerie posted exceptional growth," CFO Mike Mathias said on the earnings call in September. The company is scheduled to report Q3 results on Nov. 24.

The Children's Place enjoyed a 118% jump in digital sales in the second quarter, but total revenue still fell by 25%. As of early August, the majority of the children's specialty apparel retailer's locations were reopened. The company continues to make progress on its store fleet optimization initiative that it kicked off in 2013, which entails shuttering hundreds of stores in an effort to cut costs. The Children's Place is now targeting 625 stores by the end of fiscal 2021.

Skechers has been somewhat more resilient than some of its peers, with third-quarter sales falling by just 4%. One notable bright spot was a 24% increase in China sales, as the Middle Kingdom has been largely successful in containing the virus, allowing the economy to recover.

VF, which operates brands like Vans and The North Face, has also reopened nearly all of its retail stores around the world. The company warned last month that it expects "ongoing disruptions" to its business due to the pandemic.

Now what

Pfizer and BioNTech are optimistic that the vaccine candidate can achieve the necessary safety milestones by the third week of November, at which point they will submit it for Emergency Use Authorization from the U.S. Food and Drug Administration.

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