A Shopping List For This Week's Retail Earnings

The retail sector faced a difficult environment in the first quarter, but many challenges have been around for some time, including:

• Customer service offered by online shopping performing faster and better than brick-and-mortar stores.
• The rise of e-commerce giants like Amazon.com, Inc. AMZN.
• Changes in the way shoppers go to the mall, such as visiting specific stores for known products rather than browsing for hours.

Q1 earnings reports from a mix of low-cost and high-end retailers this week will shed some more light on how companies are dealing with these challenges. Analysts are looking out for these retailers' reports:

Dollar General Corp. DG

Dollar General is scheduled to report their Q1 results Thursday. The company is also expected to provide fiscal 2017 guidance.

Loop Capital Markets analyst Anthony Chukumba estimates a diluted EPS of $1.07, slightly above consensus. They assume a 0.4 percent increase in comps, a flat gross margin year-over-year and SG&A expenses increasing by 40 basis points as a percentage of net sales.

The analyst’s fiscal 2017 diluted EPS estimate is $0.03 below consensus, reflecting less optimistic profitability expectations.

“We expect investor focus to primarily be on same-store sales growth, particularly given the continuing slowdown over the past several quarters,” Chukumba said in a note.

Lululemon Athletica inc. LULU

Lululemon will release its Q1 earnings Thursday after the market closes.

“Is LULU's 1Q forecasted comp deceleration a harbinger that the brand has lost its cache amid increased competition, or a repercussion of a difficult retail backdrop and execution issues? Thursday's results may not resolve that debate,” Deutsche Bank analyst Paul Trussell said in a note.

The analyst is raising his Q1 total comps to negative 1.5 percent from negative 1.8 percent on signs of stronger e-commerce growth. This factors in a lowered brick-and-mortar comp from negative 2.5 percent to negative 3 percent.

Trussell also noted concerns over a lack of color in Lululemon’s spring collection.

Five Below Inc FIVE

Financial results for Five Below will be reported after the market closes on Thursday.

Good news is expected from Five Below, thanks to a well-executed spring assortment and the recent fidget spinner boom. Deutsche Bank analysts said comps could rise by 120 basis points thanks to the popular toy.

They estimate a $0.14 EPS and same-store sales growth of 2 percent.

Investors should also look for positive commentary from management on the nine stores Five Below opened in the Los Angeles area at the end of April.

J.Jill Inc JILL

J.Jill will be reporting its Q1 earnings during the pre-market session on Wednesday.

“We remain confident that JILL will continue to outperform specialty apparel peers on the topline while also driving industry leading earnings growth,” said Deutsche Bank's Trussell.

The analyst maintains an adjusted EPS forecast of $0.19, 1 cent higher than the Street and at the high end of guidance.

Eyeing Q2, the Trussell expects marketing efforts to guide comps up 7 percent and models an adjusted EPS of $0.26.

Other retailers reporting this week include Zumiez Inc. ZUMZ, Express, Inc. EXPR and Ollie’s Bargain Outlet Holdings Inc OLLI.

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