Retail Sales Earnings Kickoff Tomorrow With Low Expectations

Retail

Published: February 19, 2014 3:24 pm

Last Updated: April 28, 2020 4:06 am

Mega-retailer Wal-Mart Stores Inc. (NYSE: WMT) and upscale chain Nordstrom Inc. (NYSE: JWN) report fourth-quarter and full-year earnings Thursday, with the Walmart posting results before the bell and Nordstrom after the close. This marks the march of retailer results that continues into next week.

Research firm Retail Metrics makes it sound like we should be expecting something akin to Napoleon’s retreat from Moscow:

Margins have been pressured by intense price competition from both brick and mortar rivals and online rivals. Fourth quarter earnings expectations have steadily ratcheted lower since the fall as a spate of retailers issued earnings warnings in conjunction with both 3Q13 earnings and 2013 Holiday sales releases. A shortened Holiday shopping season couple with adverse weather conditions only exacerbated the problematic promotional environment. … [We expect] to see a 5% year-over-year earnings decline in the fourth quarter. This would mark the worst quarterly retail earnings performance in 19 quarters dating back to 2Q09 ….

Walmart warned last month that earnings per share would come in below the low end of the company’s expected range of $1.60 to $1.70. Analysts have stuck with $1.60. Retail Metrics pegs quarterly same store sales to be down 0.3%. And we think the chances that Walmart might acquire Family Dollar Stores Inc. (NYSE: FDO) are vanishingly small.

Analysts have estimated Nordstrom will post earnings per share of $1.34, a penny less than the estimate 90 days ago. The company expects same-store sales growth for the quarter of 2% to 3%. Retail Metrics has pegged same-store sales growth at 2.3%.

Retail Metrics also notes that of the 40 retailers that have already reported results for a quarter ending either in November or December missed expectations by an average of 0.1% which may not sound too bad until it is compared with a long-term average of 3% growth. Stay tuned, it promises to be a busy week ahead.

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