The retail earnings deluge isn’t over — it just took the weekend off.
Last week highlighted big-box operators such as Wal-Mart Stores (ticker: WMT) and Target Corp. (TGT) and the twin home improvement titans Home Depot (HD) and Lowe’s Companies (LOW). This week, we’ll see a wider range of retailers report, spanning luxury, electronics and dollar stores.
Better still: Several of these stocks are in the midst of hot multi-month runs that could either pick up a little more tailwind this week … or come to a screeching halt.
Here are five big retail names that should make headlines this week:
Best Buy Co. (BBY). Best Buy steps into the earnings ring Tuesday morning, and the financial test is perfectly timed for a beleaguered electronics retailer sitting at yet another existential crossroads.
After all, Best Buy is celebrating its 50th birthday this week.
Yes, things have been worse. Rewind to December 2012, when shares were trading well below their financial crisis lows. Best Buy was mired in plummeting revenues and red ink, and the market had had enough of the dying idea that Richard Schulze was going to buy the company out. CEO Hubert Joly, though, cut costs and enacted other unsexy but ultimately effective internal changes, and BBY shares currently sit at nearly triple their 2012 lows.
But things are hardly hunky-dory.
Best Buy has more than twice as much cash and investments than debt, and BBY has operated soundly in the black for three years. But Amazon.com (AMZN) remains a growing threat to Best Buy’s sales, which are expected this year to slip to $39.27 billion — more than 20 percent lower than its 2011 revenues. Jefferies, the ratings service, recently downgraded BBY stock because one of its big-ticket sellers (4K TVs) are suffering steep price cuts at the same time Wal-Mart and Target are improving their offerings.
[Read: How to Bet on the U.S. Consumer.]
Meanwhile, quarterly earnings estimates are 12 percent lower from last year, and analysts expect sales to dip more than 1 percent. Investors can only hope that last week’s sympathy selloff amid Target’s weak results will soften any negative blow come Tuesday.
Dollar General Corp. (DG) and Dollar Tree (DLTR). The two publicly traded goliaths of the dollar-store space might still have beef after their 2014 battle to acquire Family Dollar. But at least in 2016, the dollar-store jungle has been big enough for both of them. DLTR and DG are both up around 25 percent in 2016 and have repeatedly set new all-time highs.
But while both have enjoyed some of the same tailwinds this year — cheap gas and lower unemployment chief among them — they’ve gotten there in different ways.
Dollar General has produced a pair of earnings beats reflecting the company’s ability to both get more people in its stores and sell more to them. Consumables (such as candy and tobacco) especially have been a hit. DG also is expanding rapidly, on track to add 900 stores this year and another 1,000 in 2017. Dollar General even flexed at Wal-Mart a few weeks ago, buying 41 failed Wal-Mart Express locations with plans of moving in and even selling fresh produce in addition to its normal wares.
[See: 6 of the Most Overvalued Stocks on the Market.]
While DG was soaring in March, Dollar Tree was struggling on a lackluster quarter that did see revenues more than double thanks to the FDO acquisition, but margins suffered as it digested the merger, and comps at its legacy stores sank. However, a fiscal first-quarter earnings beat on lower overhead and an annual guidance hike in May sent DLTR off to the races.
Wall Street is expecting big things from each when they report Thursday morning. Analysts expect 7.9 percent top-line growth to $5.5 billion, and nearly 15 percent earnings growth to $1.09 per share. Family Dollar’s presence will be felt again in Dollar Tree’s report, with DLTR expected to grow revenues 69 percent to $5.08 billion and profits 192 percent to 73 cents per share.
Tiffany & Co. (TIF). Tiffany’s yo-yo 2016 has shares currently down 10 percent for the year despite a nearly monthlong snapback. And short of a big earnings-day surprise to the upside, TIF stock could be in store for another swing of the pendulum.
The narrative dogging TIF in the long run is brand relevance. Specifically, analysts believe Tiffany and other luxury brands don’t mean nearly as much to the millennial generation, and will take more brand investment to acquire. Worse, even if Tiffany does get through to millennials, the generation still might simply spend less on higher-end goods.
But more immediately, TIF has been dogged by the strong greenback, and the resulting hit to tourist sales upon which Tiffany relies.
Last quarter, Tiffany notched a sales miss and offered downbeat guidance thanks to a strong dollar and weak tourist spending. But we expected that — Tiffany warned us about this in March, when the strong dollar weighed on fourth-quarter results. If this sounds familiar, that’s because a strong dollar was cited as a headwind in the previous three quarters, too.
The U.S. dollar tightened up a bit during the May-July period that Tiffany & Co. is about to report. Tiffany is expected to shed 5.4 percent on the top line and 16 percent on the bottom line, and investors can only hope that analysts overshot with their bearish projections.
Sears Holdings Corp. (SHLD). The Great Sears Dumpster Fire rages on.
SHLD is up nearly 45 percent since late May, with most of those gains coming following the May 26 release of its first-quarter earnings report. But it wasn’t great financials that did the trick. Sears’ loss widened by 55 percent to $471 million, and the per-share deficit of $4.41 fell well below the $3.20 that analysts expected.
The only encouraging news was that Sears might wring more blood from the stone by selling off some of its last attractive assets — its Kenmore, DieHard and Craftsman brands.
Sears employees have since laid out just how ugly things are in a Business Insider report, filled with encouraging remarks about stores such as “severely understaffed,” “cutting labor hours for the workers that remain” and “store’s employees hadn’t seen raises in eight years.” Longer-term, comps have declined every year since 2005, and Moody’s currently has a “negative” rating on Sears’ credit outlook.
[Read: How 7 Big-Box Retail Stocks Are Faring.]
The official estimates are for a 45 percent deeper loss of $3.48 per share on a revenue decline of 12.5 percent to $5.43 billion. But short of Sears announcing that it has successfully executed cold fusion, don’t expect any hope for a meaningful turnaround.
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5 Retail Stocks Reporting Earnings This Week (BBY DG DLTR TIF SHLD) originally appeared on usnews.com
