Barclays on U.S. Department Stores/Broadlines: 3Q11 Earnings Preview
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Price: $22.89 +0.48%
Rating Summary:
9 Buy, 19 Hold, 4 Sell
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Today's Overall Ratings:
Up: 7 | Down: 6 | New: 31
Rating Summary:
9 Buy, 19 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 7 | Down: 6 | New: 31
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Barclays on U.S. Department Stores/Broadlines: 3Q11 Earnings Preview
Barclays analyst, Robert S Drbul, said, "We believe that macroeconomic conditions and consumer spending, apparel inflation, the impact of price increases in 2H11, AUR and traffic trends and Spring 2012 orders will be central topics in 3Q11. Results in the quarter are expected to include the full effect of price increases implemented mid-year, offsetting higher input costs and negatively impacting unit volumes. We expect to see tighter inventory management at retailers, as this has been recently noted by certain apparel vendors. As demonstrated during 2Q11 at the retailers, inventories have been strictly managed, up 9.4% y/y, compared to a sales increase of 7.1%."
"We are raising our Macy's (NYSE: M) 3Q11 and FY11 EPS estimates to $0.16 and $2.68 from $0.13 and $2.65, respectively. We are also raising our FY12 EPS estimate to $3.00 from $2.95 as we believe that strong sales trends will continue. While October same store sales results were more challenged, the company was able to generate a solid 4.0% comp increase for the quarter (with a 5% increase in AUR), in line with expectations. Though GMs are expected to decline due to the strong growth of the e-commerce business and accordingly the impact of free shipping, we believe that the company has been able to protect GMs to some degree by achieving AUR increases."
"We are expecting Kohl's (NYSE: KSS) to report 3Q11 EPS of $0.79 and FY11 EPS of $4.47, implying 4Q11 EPS of $1.96. Despite recent volatility in monthly sales trends, we are encouraged by the company's success with cost controls. While we do not expect to see upside to gross margins for the quarter (we estimate flat y/y), we believe the company will achieve SG&A leverage through cost-cutting measures and improvement of bad debt expense. We also believe that Kohl's will benefit from strong inventory management and from their continued return of capital to shareholders, as our 3Q estimate includes the expected repurchase of $500 mm of shares during 3Q11."
Barclays analyst, Robert S Drbul, said, "We believe that macroeconomic conditions and consumer spending, apparel inflation, the impact of price increases in 2H11, AUR and traffic trends and Spring 2012 orders will be central topics in 3Q11. Results in the quarter are expected to include the full effect of price increases implemented mid-year, offsetting higher input costs and negatively impacting unit volumes. We expect to see tighter inventory management at retailers, as this has been recently noted by certain apparel vendors. As demonstrated during 2Q11 at the retailers, inventories have been strictly managed, up 9.4% y/y, compared to a sales increase of 7.1%."
"We are raising our Macy's (NYSE: M) 3Q11 and FY11 EPS estimates to $0.16 and $2.68 from $0.13 and $2.65, respectively. We are also raising our FY12 EPS estimate to $3.00 from $2.95 as we believe that strong sales trends will continue. While October same store sales results were more challenged, the company was able to generate a solid 4.0% comp increase for the quarter (with a 5% increase in AUR), in line with expectations. Though GMs are expected to decline due to the strong growth of the e-commerce business and accordingly the impact of free shipping, we believe that the company has been able to protect GMs to some degree by achieving AUR increases."
"We are expecting Kohl's (NYSE: KSS) to report 3Q11 EPS of $0.79 and FY11 EPS of $4.47, implying 4Q11 EPS of $1.96. Despite recent volatility in monthly sales trends, we are encouraged by the company's success with cost controls. While we do not expect to see upside to gross margins for the quarter (we estimate flat y/y), we believe the company will achieve SG&A leverage through cost-cutting measures and improvement of bad debt expense. We also believe that Kohl's will benefit from strong inventory management and from their continued return of capital to shareholders, as our 3Q estimate includes the expected repurchase of $500 mm of shares during 3Q11."
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