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Retail Earnings: What to Watch This Week


Here come the retailers. After a string of positive consumer data showing confidence at a five-year high and decent same-store sales in October, many of our nation's top retail chains are set to report third-quarter earnings results this week. Forecasts from retailers like Wal-Mart and Target are arguably the best gauges of consumer strength now and the jam packed earnings lineup is sure to bring more clarity moving forward.

Brian Sozzi, chief equities analyst at NBG Productions, knows what he's looking for and it's all about expectations for the key holiday spending season.

"I need that fourth quarter guidance," says Sozzi. "Here's my tell: [despite] all of this positive consumer data we've gotten over the past couple months, these retail stocks continue to go down. So there's a lot of uncertainty out there."

Some of that uncertainty stems from superstorm Hurricane Sandy that battered the East Coast just days before Halloween. Those in the storm's path had a full weekend to prepare and stock up on staples like food, batteries, flashlights, etc. What's concerning to any retail investor is whether these late October expenses will directly deduct from holiday spending.

"These were unplanned expenses," says Sozzi. "I think Sandy has an opportunity to feed on how the consumer acts for Black Friday and the rest of the holiday season and therefore you have to question some of the initial fourth quarter earnings outlooks, and essentially retail turns into a week-by-week story and a bunch of trades."

And this is certainly one of those much-watch weeks for retail. The list earnings are below and check out Sozzi's top two retail stock picks in the attached video.

Tuesday: Home Depot (HD), Michael Kors (KORS), Saks (SKS), TJX Cos. (TJX), Dick's Sporting Goods (DKS)

Wednesday: Abercrombie & Fitch (ANF), Staples (SPLS), Hot Topic (HOTT), Limited (LTD), PetSmart (PETM)

Thursday: Target (TGT), Wal-Mart (WMT), Gap (GPS), Sears (SHLD), Dollar Tree (DLTR), Ross Stores (ROST), The Children's Place (PLCE), Williams-Sonoma (WSM)

Friday: Footlocker (FL), Ann Inc. (ANN)