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Apparel Stocks Q3 Earnings On Tap: Deckers Outdoor, Columbia, Carter's

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We are near the half-way mark of this earnings season, wherein the picture has been quite encouraging for investors. Per the Earnings Preview dated Oct 20, 87 S&P 500 members have reported quarterly results. These members account for almost 24.7% of the index's total market capitalization. So far, 71.3% of these companies have delivered positive earnings surprises, while 70.1% beat top-line expectations.

Further, earnings of these companies have increased 9.4% from the year-ago period, while revenues have rallied 7.3%. As a whole, earnings for the S&P 500 companies are anticipated to improve 2.6% while revenues are expected to be up 5% from the prior-year period.

A Look at Consumer Discretionary Sector

Out of the 16 Zacks Classified sectors, nine are expected to witness a decline this earnings season, including the Consumer Discretionary space. According to the report, earnings for this sector are estimated to decline 1.7%, while revenues are anticipated to improve 2.9%.

As per the Earnings Trend of Oct 18, about 8.1% of the S&P 500 companies in the same sector have reported their results, wherein 66.7% companies delivered an earnings beat while all surpassed revenue estimates. Further, earnings for these companies have increased 0.8% on a year-over-year basis while revenues improved 6.8%.

The consumer discretionary sector is currently positioned at the top 38% (6 out of 16) of the Zacks classified sectors. The space consists of household appliances, textile, apparel as well as toys and hobbies stocks, among others.

Considering all factors, let's see what's in store for the following stocks when they release their quarterly results on Oct 26.

Our research shows that stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP have a higher chance of a positive earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Let's See How COLM, DECK and CRI are Placed

Designer, producer and brand manager ofniche footwear and accessories Deckers Outdoor Corp DECK is likely to witness year-over-year decline in both top and bottom line in its upcoming second-quarter fiscal 2018 results, due to store closures and earlier-than-planned shipments.

We believe that the dismal performance is likely to arise from underlying weakness in the company's UGG brand. The Zacks Consensus Estimate revenue for the UGG brand is pegged at $368 million, down nearly 11% year over year. Meanwhile, the consensus estimate for both Sanuk and Teva brands are pegged at $13.2 million and $16 million, down 30.2% and 6.4%, respectively. In view of such headwinds, consensus estimate for the company's total revenue is pegged at $438 million for the to-be-reported quarter, down more than 9% from the year-ago period. Nevertheless, the company remains focused on product innovations and store augmentations to achieve long-term growth. (Read More: Store Closures Likely to Impact Deckers Q2 Earnings)

Deckers Outdoor Corporation Price, Consensus and EPS Surprise

The current Zacks Consensus Estimate for the quarter under review is $1.03, down from $1.23 reported in the year-ago period. Estimates have been stable for the company over the past 30 days. Notably the company's earnings have outperformed estimates by an average of 76.7% in the trailing four quarters.

While Deckers Outdoor currently carries a Zacks Rank #2, our earnings beat criteria was let down by the company's Earnings ESP of -0.27% for the upcoming quarter. You can see the complete list of today's Zacks #1 Rank stocks here.

Columbia Sportswear Company COLM, a designer and marketer of outdoor and active lifestyle products is slated to report third-quarter 2017 results. While the company's results are expected to gain from sturdy performance in its Europe-direct business and prAna brand, it is likely to be hurt by declines across the United Sates, Latin America and Asia Pacific (LAAP) regions. As a result, both top and bottom lines show a probable year-over-year decline.

The company has been witnessing challenges in the United Sates, especially in the wholesale front for quite some time, mainly due to store closures, bankruptcies and plans of restructuring or liquidation. Revenues in the LAAP region have also witnessed challenges lately, owing to lower sales in Korea as there has been a general shift of consumer preference away from outdoor apparel and accessories. (Read More: Factors Impacting Columbia Sportswear's Q3 Earnings)

Owing to such headwinds, analysts polled by Zacks expect net sales from United States and LAAP regions to decline 2.5% and 0.9% to $473 million and $112 million, respectively, during the third quarter. Consequently, the Zacks Consensus Estimate for total revenues of $734.9 million for the said quarter also depicts a decline of 1.4% from the year-ago period.

Columbia Sportswear Company Price, Consensus and EPS Surprise

We note that Columbia Sportswear has delivered an average positive surprise of 12.3% in the trailing four quarters. Notably, the company's earnings have outpaced the Zacks Consensus Estimate in 18 straight quarters. The Zacks Consensus Estimate for earnings is currently pegged at $1.15 for the third quarter, depicting a decline of 2.5% from the year-ago period. Estimates have remained stable for the last 30 days. However, owing to its Earnings ESP of -0.71%, earnings beat seems unlikely this time.

Let's take a look at Carter's, Inc CRI, which is a leading marketer of apparel in the United States and Canada. The company is poised to beat earnings this season with an Earnings ESP of +1.51% and a Zacks Rank #3. The consensus mark for earnings is pegged at $1.66, which depicts a year-on-year rise of 3.1%. We note that the company has outpaced the Zacks Consensus Estimate in three out of the trailing four quarters, with an average beat of 7.3%. Further, analysts polled by Zacks predict revenues to grow 5.2% to approximately $948.2 million in the third quarter of 2017.

Carter's, Inc. Price, Consensus and EPS Surprise

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Carter's, Inc. (NYSE: CRI): Free Stock Analysis Report
 
Deckers Outdoor Corporation (NASDAQ: DECK): Free Stock Analysis Report
 
Columbia Sportswear Company (NASDAQ: COLM): Free Stock Analysis Report
 
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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: contributor contributorsEarnings News

 

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