Macy's, Home Depot Kick Off Week of Retailer Earnings and Vital Consumer Snapshot

Two consumer-sensitive retailers, Macy’s Inc M and The Home Depot, Inc. HD, will take to the earnings stage before the markets open Tuesday, potentially lending insight into what consumers were buying in Q4. They’re two of a handful of retailers that will share quarterly results this week.

The looming reports leave investors wondering, did shoppers snatch up apparel and accessories for the important holiday gift-giving season? Or were their hard-earned dollars spent sprucing up their homes, perhaps as more sellers look to test the housing market with a 2016 listing?

Weather and other seasonal factors are often at work in retail earnings. Plus, traditional and specialty retailers continue to face tough competition from Amazon.com, Inc. AMZN and others.

Wall Street may want to look past the economic slowdown of late last year and focus on current conditions. On Friday, the Commerce Department said January U.S. retail sales excluding automobiles, gasoline, building materials, and food services increased 0.6% after an unrevised 0.3% decline in December. This so-called core retail sales figure is believed by Street economists to correspond most closely with the consumer spending component of gross domestic product. The January reading was stronger than the rebound Street economists had banked on.

Already Braced for Reality?
Macy’s gave investors a heads-up twice in January, saying then that earnings and revenue were going to fall short of its own forecasts as it slashed jobs and failed to finish a development transaction that would have boosted revenues. M acknowledged then that holiday same-store sales, a key measure for retailers, fell 4.7%. Add to that the disappointing results from Nordstrom (JWN) late last week and the overall downturn in the department-store sector, and safe to say, industry analysts aren’t expecting blockbuster results.

At last check, analysts reporting to Thomson Reuters are forecasting a per-share profit of $1.88 on top-line sales of $8.83 billion. Compared to results in the same period last year, that’s a 23% drop in profit on a 6% decline in revenue.