5 Department Stores To Watch Before Earnings

Telsey Advisory Group commented on department stores Tuesday ahead of Q1 earnings reports.

Analysts Dana Telsey and Anja Soderstrom modeled an average increase of 2.6 percent in comparable store sales for department stores versus 0.3 percent in the prior year.

Telsey noted three themes to look for in Q1 earnings, including the West Coast port issue, a comeback in consumer spending, and more favorable weather.

Below are five department store stocks the firm commented on along with current ratings and price targets.

Kohl's Corporation KSS - Outperform, $80 price target

Telsey expected expect Kohl’s to report 1Q15 EPS of $0.54 vs. $0.60 last year, and $0.01 below the consensus.

The analyst also expected ongoing benefits from the Yes2You loyalty program, favorable weather, and execution would “help drive a 2.7% increase in comparable store sales vs. the consensus of 2.4% and (3.4%) last year.”

The firm modeled comparable store sales of 2.5 percent for the 2015, above the consensus of 2.1 percent.

Kohl's Corporation reports earnings on Thursday, May 14.

Related Link: Digging Into Macy's Valuation

J C Penney Company Inc JCP - Outperform, $10 price target

Telsey projected a Q1 2015 loss per share of ($0.72) vs. ($1.16) a year ago and narrower than the consensus estimate of ($0.79).

“In mid-April, J.C. Penney pre-released 1Q15 comparable store sales of 3.5% to 4.5%, which would be an encouraging result against 7.4% growth in the prior year. We are forecasting 4.3% comps for the quarter, above the consensus of 3.9%,” Telsey wrote.

The analysts expected the focus on the first quarter results would be the “magnitude of continued improvement” in margin expansion, and expected 460 bps driven by 265 bps in gross margin to result in 35.7 percent.

J C Penney Company Inc reports earnings on Wednesday, May 13.

Ross Stores, Inc. ROST - Market Perform, $100 price target

The analysts expected Ross Stores to report Q1 EPS of $1.28 vs. $1.15 last year, two cents above the company’s guidance range of $1.21-$1.26 and in line with the consensus.

“In terms of top line, we project total sales to increase 7.0% YoY to $2.869B based on a comparable store sales increase of 3.0% vs. 1% last year and a 2-YR stacked comparison of 4%; the consensus estimate for comparable store sales is 3.4%,” according to Telsey.

Ross Stores, Inc. reports earnings on Thursday, May 21.

TJX Companies Inc TJX - Market Perform, $73 price target

TJX was expected to report fiscal Q1 EPS of $0.65 vs. consensus of $0.66 and the guidance range of $0.64-$0.66.

“Our comparable store sales estimate of 2.9% is at the higher end of the guidance of 2%-3%, and slightly below of the consensus of 3.0%,” and Telsey forecasted F1Q16 sales growth of 3.6 percent to $8.723 billion.

TJX Companies Inc reports earnings on Tuesday, May 19.

Burlington Stores Inc BURL - Outperform, $67 price target

The firm forecasted Q1 EPS of $0.42 vs. $0.25 last year, $0.01 above the the consensus estimate and above the guidance range of $0.36-$0.40.

Telsey projected a total sales increase of 7.8 percent to $1.224 billion, based on comparable store sales of 3.8 percent vs. 2.7 percent in the prior year last year and the consensus estimate of 3.6 percent.


Burlington Stores Inc reports the week of June 8.