Stifel Previews Department Stores Q3 Earnings: Macy's, Kohl's And Nordstrom

Richard Jaffe previewed Softline retailers upcoming third quarter results in a note to clients on Monday. The analyst maintains a positive tone on Macy's, Inc. M, Kohl's Corporation KSS and Nordstrom, Inc. JWN.

Jaffe notes that there exists “near-term uncertainty” at the three companies but the analyst believes in the companies longer-term performance.

Kohl's pre-released its expected third quarter comps, showing a 1.4 percent decline, driven by weak store traffic. Jaffe expects similar trends at both Macy's and Nordstrom.

“In our opinion, the consumer is reacting to lack of a strong fashion trend this year, uncertainty regarding the economy and negative headline news,” Jaffe wrote.

However, all three companies are “advantaged” according to Jaffe because they offer a broad assortment of merchandise with a focus on improving their apparel assortment to attract younger customers. In addition, the analyst adds that “dramatic” consolidation has helped the three companies become more dominant.

Finally, Jaffe notes that allowances from vendors help to offset markdown expense and gross margin erosion in addition to higher marketing expenses.

Jaffe expects Macy's to earn $0.52 in its third quarter, Kohl's to earn $0.74 in its third quarter and Nordstrom to earn $0.71 in its third quarter.