Barclays on Retail (U.S. Department Stores/Broadlines): 2Q11 Earnings Preview
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Rating Summary:
9 Buy, 19 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 10 | Down: 13 | New: 20
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Barclays on Retail (U.S. Department Stores/Broadlines): 2Q11 Earnings Preview
Barclays analyst, Robert S. Drbul, said, "With Macy's (NYSE: M) kicking off the 2Q11 reporting season for Broadline/Department Store retailers on Wednesday, August 10, before the market opens, we expect macroeconomic conditions in the U.S., apparel inflation, pricing trends and inventory levels into the important back to school selling season all to be central themes. Expectations for rising material costs, as well as labor costs, make these dynamics especially important, since the majority of the impact from input cost inflation is expected to result in higher prices at the retail level in 2H11. While confidence remains critical, we do note that the unemployment rate in July decreased to 9.1%, and the jobs report was above expectations. We believe consumers would also welcome the pullback in gas prices, with the recent drop in oil prices to the low 80s."
"Given heightened back half concerns, we are reducing estimates for several retailers for 2H11 and 2012, including Saks (NYSE: SKS), Kohl's (NYSE: KSS), J.C. Penney (NYSE: JCP) and Wal-Mart (NYSE: WMT), reflecting our belief that lower spending levels across the board are likely imminent."
"We are expecting Kohl's to report 2Q11 EPS of $1.08. While July sales results were disappointing, the company was able to generate a respectable 1.9% comp increase for the quarter...We are also lowering our 2011 and 2012 EPS to $4.40 and $5.00 from $4.50 and $5.30. At current levels, incorporating these new estimates, we continue to see a compelling valuation."
Barclays lowers FY12 EPS estimates on SKS from $0.50 to $0.48. Also, WMT's FY12 estimate is cut from $5.00 to $4.95.
Barclays analyst, Robert S. Drbul, said, "With Macy's (NYSE: M) kicking off the 2Q11 reporting season for Broadline/Department Store retailers on Wednesday, August 10, before the market opens, we expect macroeconomic conditions in the U.S., apparel inflation, pricing trends and inventory levels into the important back to school selling season all to be central themes. Expectations for rising material costs, as well as labor costs, make these dynamics especially important, since the majority of the impact from input cost inflation is expected to result in higher prices at the retail level in 2H11. While confidence remains critical, we do note that the unemployment rate in July decreased to 9.1%, and the jobs report was above expectations. We believe consumers would also welcome the pullback in gas prices, with the recent drop in oil prices to the low 80s."
"Given heightened back half concerns, we are reducing estimates for several retailers for 2H11 and 2012, including Saks (NYSE: SKS), Kohl's (NYSE: KSS), J.C. Penney (NYSE: JCP) and Wal-Mart (NYSE: WMT), reflecting our belief that lower spending levels across the board are likely imminent."
"We are expecting Kohl's to report 2Q11 EPS of $1.08. While July sales results were disappointing, the company was able to generate a respectable 1.9% comp increase for the quarter...We are also lowering our 2011 and 2012 EPS to $4.40 and $5.00 from $4.50 and $5.30. At current levels, incorporating these new estimates, we continue to see a compelling valuation."
Barclays lowers FY12 EPS estimates on SKS from $0.50 to $0.48. Also, WMT's FY12 estimate is cut from $5.00 to $4.95.
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