Retail

Earnings Preview: Six Major Retailers on Tap for This Week

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So far this earnings season U.S. retailers haven’t put up a very good show. Retailers that have already reported results said that customers had become cautious again during the quarter and same-store sales reports for July did not show a lot of improvement.

Among retailers reporting earnings this week we’ve selected six to preview: The Home Depot Inc. (NYSE: HD), Lowe’s Companies Inc. (NYSE: LOW), Target Corp. (NYSE: TGT), Best Buy Co. Inc. (NYSE: BBY), Gap Stores Inc. (NYSE: GPS), and J.C. Penney Co. Inc. (NYSE: JCP).

Home Depot is touted to post earnings per share (EPS) of $1.21 on revenues of $21.8 billion on Tuesday. After a better-than-expected showing in its first quarter, Home Depot revised its 2013 guidance higher, projecting revenue growth of 2.8%, same-store sales growth of 4%, and diluted EPS of $3.52 for the full year. The consensus analysts’ estimates now call for full-year EPS of $3.64 on revenues of $77.57 billion. Shares are trading in the early afternoon Monday at $76.06, up about 0.9%, in a 52-week range of $55.98 to $81.56.

Lowe’s, which reports on Wednesday, is expected to post EPS of $0.79 on revenues of $15.06 billion. The company missed the consensus EPS target last quarter, and the quarterly EPS estimate is 16% higher than what the company actually earned in the same period a year ago. Lowe’s shares are trading down 0.2% today, at $43.86 in a 52-week range of $25.97 to $46.25.

The consensus estimates for Target call for EPS of $0.98 on revenues of $17.29 billion when the retailer reports results on Wednesday. The big-box store has missed EPS estimates for the past two quarters and at the end of last quarter Target lowered its forecast for full-year EPS to a range of $4.70 to $4.90. The consensus estimate from analysts calls for full-year EPS of just $4.33, and the estimate from Retail Metrics for same-store sales growth in August is 2.3%. Shares are trading up about 0.5% today at $68.39 in a 52-week range of $58.01 to $73.50.

Best Buy beat the consensus earnings estimate last quarter and the estimate for the July quarter is considerably lower at $0.12 a share on $9.13 billion in revenues. The company did say that it expected expenses to be higher in the second quarter, yet the consensus estimate has added a penny in the past 90 days. The company reports results before markets open on Tuesday, and shares are trading up 1.5% at $30.83 in a 52-week range of $11.20 to $32.17.

Research firm Retail Metrics expects Gap Stores to post August same-store sales up 2.3% from August of 2012. Last year same-store sales jumped 9% year-over-year and Gap stock had been on a roll until the beginning of August, losing more than 7%. The consensus estimates call for EPS of $0.64 on revenues of $3.83 billion when the company reports results on Thursday. Shares are trading down about 1.1% on Monday at $42.63 in a 52-week range of $29.84 to $46.56.

J.C. Penney’s unbroken string of quarterly losses is expected to continue, with consensus estimates calling for an EPS loss of $1.06 on revenues of $2.76 billion. The departure of investor William Ackman from the company’s board won’t be enough to turn the company around as long as sales continue to dip. Retail Metrics projects a same-store sales drop of 8.3% for August and the bad news just keeps on coming for the venerable retailer. Shares are down about 1.5% at $13.21 in a 52-week range of $12.34 to $32.55.

Wal-Mart Stores Inc. (NYSE: WMT), Macy’s Inc. (NYSE: M), Kohl’s Corp. (NYSE: KSS), and Nordstrom Inc. (NYSE: JWN) have all already reported poor quarterly results that barely met expectations in most cases. There’s no reason to expect anything substantially different this week, except perhaps from Home Depot, which has history of being cautious with its estimates.

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