Wal-Mart, Kohl's Nordstrom, Dollar Tree Report Earnings

TheStreet.com

NEW YORK (TheStreet) -- With the peak holiday shopping season arriving, the next two weeks will offer insight into the health of the retail sector as Wal-Mart , Kohl's , Nordstrom and Dollar Tree all report earnings.

As the world's largest retailer, Wal-Mart's results, due Thursday before the opening bell, serve as a significant indicator, both into the health of the sector and the American economy as its recovers from The Great Recession. The analyst community is looking for 4% growth in year-over-year earnings to $1.13 for the fiscal third quarter, off by a penny over the last 60 days. Revenues are projected to have jumped by more than 2% to $116.75 billion. For the previous two quarters, Wal-Mart missed the consensus estimates, however.

Having more than $400 billion in annual sales makes it difficult for Wal-Mart to move the needle much on a quarterly basis. Wal-Mart has launched an aggressive expansion in China, shifting its focus to smaller cities that are expected to grow rapidly in the world's most populous country. Over the next three years, Wal-Mart plans to open 110 new super-centers and Sam's Clubs, while closing 15 to 30 underperforming stores.

America's largest department store chain, Kohl's, reports third quarter results along with Wal-Mart premarket Thursday. Wall Street is looking for earnings-per-share of 86 cents and revenues of $4.55 billion. That is a drop from 91 cents per share and from $4.49 billion in sales in the same period a year earlier, with the analyst consensus not moving over the past 60 days.

Also reporting on Thursday for the third quarter is Nordstrom, one of the largest upscale retailers in the United States. Earnings-per-share are expected to come in at 66 cents per share, off by 7% from last year. For the previous quarter, however, Nordstrom topped the consensus EPS estimates by more than 5%. The analyst community is looking for revenues of $2.87 billion, up more than 2% from a year ago.

On the other end of the retail spectrum is Dollar Tree, with almost 5000 stores selling many items in the $1 range in the United States and Canada. Reporting on Nov. 21, Dollar Tree and its peers in the discount variety group have taken away business from Wal-Mart and others, due to the impact of The Great Recession. This group has also not suffered from Amazon.com and other Internet retailers as it caters to those who pay cash for low cost goods. Dollar Tree had a 9.8% increase in second-quarter earnings with revenue growth of 8.8% from sales of $1.85 billion.

Dollar Tree expects third quarter sales in the range of $1.87 billion to $1.92 billion. Same store sales growth should be in the low- to mid-single digits. Management expects 54 cents to 59 cents EPS on a diluted basis.

Although it has been a good month for some in the sector, Wal-Mart is up more than 4% with Kohl's soaring more than 10% for the same period, many are expecting the holiday season to be less than jolly for traditional retailers. The government shutdown rattled consumer confidence, which will result in reduced sales. A Goldman Sachs survey conducted in mid-October found that 40% of Americans have cut spending. Amazon and others continue to transact more sales over the Internet. By the time the opening bell is rung Thursday with Wal-Mart and Kohl's reporting, how Main Street and the retail industry are rebounding from The Great Recession will be much clearer to Wall Street.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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