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Heading into the Thanksgiving long weekend, we get a flurry of earnings results from leading retailers that are likely to benefit from the upcoming Black Friday and Cyber Monday sales extravaganzas.
Several prominent big box retailers, including Walmart (NYSE:WMT) and Target (NYSE:TGT), reported better-than-expected earnings over the past week, which set the stage (and expectations) for earnings from several well-known apparel and specialty retailers.
As a group, stocks of these retail chains have performed incredibly well this year as consumers return to in-person shopping with a vengeance and populate shopping malls across the U.S. again.
Here are seven retail stocks reporting earnings during the shortened week of Nov. 22:
- Best Buy (NYSE:BBY)
- Dollar Tree (NASDAQ:DLTR)
- Nordstrom (NYSE:JWN)
- Dick’s Sporting Goods (NYSE:DKS)
- Gap (NYSE:GPS)
- American Eagle Outfitters (NYSE:AEO)
- Ambercrombie & Fitch (NYSE:ANF)
Earnings Reports: Best Buy (BBY)
Source: BobNoah / Shutterstock.comFirst out of the gate next week is Best Buy, whose latest quarterly numbers arrive on Nov. 23, just days before the annual Black Friday and Cyber Monday sales events that drive sales of the company’s electronics and appliances through the roof.
And BBY stock has been jumping higher in the lead up to the busy holiday sales season, having risen 29% since Oct. 1 to its current price of $135 a share. Year-to-date, the stock is up 35%.
Strong quarterly numbers could push the share price even higher as investors anticipate blockbuster sales over the Thanksgiving long weekend this year as we emerge from the pandemic and consumers feel confident to get out and spend again.
Despite its recent run, Wall Street thinks the share price of Richfield, Minnesota-based Best Buy can run even higher. A parade of banks upgraded their price targets on BBY stock in recent months, notably Bank of America (NYSE:BAC), which raised its target on the stock to $157 from $145 previously and reiterated a “buy” rating.
For its earnings next week, analysts are anticipating that the consumer electronics company will report earnings per share (EPS) of $1.85 on revenues of $11.46 billion. Although given the strength of retail sales lately, it wouldn’t be a surprise for Best Buy to beat expectations.
Dollar Tree (DLTR)
Source: StepanPopov/shutterstock.comAnother stock that has been performing well in the lead up to the holidays is Dollar Tree, whose share price has gained 30% in the last month to now trade at $131.59.
The Chesapeake, Virginia-based company that has more than 15,000 retail outlets in the U.S. and Canada is a popular destination for shoppers during the holiday period, whether buying oven mitts for Thanksgiving dinner or stocking stuffers at Christmas.
In addition to its annual holiday run, DLTR stock also got a boost recently from news that activist investor Mantle Ridge has taken a $1.8 billion stake in the company, reportedly with intentions of making Dollar Tree more profitable.
Specifically, Mantle Ridge wants to strengthen the lagging Family Dollar retail chain that Dollar Tree acquired in 2015 and runs as a separate brand. News of Mantle Ridge’s involvement was greeted enthusiastically by investors, who pushed DLTR stock up 14% the day the stake was announced.
Mantle Ridge is already pushing Dollar Tree to raise prices. The discount retailer announced in September that it would sell more items priced above $1 in an effort to boost revenue and profits. Next week, Wall Street is looking for Dollar Tree to announce EPS of 96 cents on revenues of $6.41 billion.
Earnings Reports: Nordstrom (JWN)
Source: Jonathan Weiss / Shutterstock.comNordstrom also reports next week, and shareholders will be hoping that a strong showing from the luxury department store chain will add to the current momentum behind its share price.
JWN stock has risen 18% in the past month to trade around $35.05 a share. A going concern since 1901, Nordstrom’s sales have gotten a boost this year as the economy recovered from the pandemic.
Over the past week, Nordstrom’s share price increased 3% as other retailers have reported blockbuster financial results. In particular, the company’s “Nordstrom Rack” that specializes in discounted luxury goods and clothes has been particularly strong this year with consumers.
In the lead up to Black Friday and Cyber Monday, Nordstrom issued or reissued several popular clothing items, including its top selling peacoat. The company also rolled out a number of discounts and is advertising heavily ahead of the biggest shopping weekend of the year, all of which should help boost its sales in the current fourth quarter.
For the previous third quarter, which Nordstrom reports on Nov. 23, analysts are forecasting that the Seattle-based company will report EPS of 56 cents and revenues of $3.54 billion.
Dick’s Sporting Goods (DKS)
Source: Jonathan Weiss / Shutterstock.comDick’s Sporting Goods has a lot to live up to following its last earnings release proved to be a monster quarter that beat analysts expectations across the board and sent the company’s share price skyrocketing.
The Coraopolis, Pennsylvania-based company reported that its second quarter sales rose 21% compared to a year ago and were up 45% compared to 2019. The sports equipment retailer has continued to do a brisk business during the pandemic as consumers bought items ranging from workout clothes to golf clubs.
Year-to-date, DKS stock is up 150% to just under $140 a share, including a 13% gain over the last month.
The company’s share price got a recent boost after it was announced that it has entered into a marketing partnership with sneaker and sports apparel giant Nike (NYSE:NKE) that will enable consumers to access “exclusive products, experiences and offers” by connecting the Dick’s Scorecard and Nike membership accounts through the Dick’s Sporting Goods mobile app.
Dick’s also announced plans to hire 9,000 workers over the holidays this year, a 13% increase from 2020 as it focuses on digital sales fulfilment. Looking ahead to its earnings next week, analysts are calling for the company to report EPS of $1.92 on revenues of $2.47 billion.
Earnings Reports: Gap (GPS)
Source: ShutterstockClothing giant The Gap also reports on Nov. 23 and analysts anticipate that the San Francisco-based company will report EPS of 50 cents and revenues of $4.45 billion.
Like the other stocks on this list, GPS enjoyed a nice gain this year, up 30% since January to slightly under $25 per share. The stock gained 8% in the last month. The company, whose other brands include Old Navy, Banana Republic and Athleta, is the sixth largest apparel retailer by market capitalization.
While there hasn’t been a lot of news from Gap recently, the company has been reporting strengthening sales this year as consumers emerge from Covid-19 hibernation and return to shopping malls and in-person shopping.
The one notable piece of news from the company is that it signed a deal to sell all 11 of its retail outlets located in Italy to Italian retailer OVS. The deal will allow Gap to “operate its business through a more capital efficient partner model,” the company said in a news release. The deal led GPS stock to jump 5%.
Any earnings beat next week could propel the share price even higher.
American Eagle Outfitters (AEO)
Source: ShutterstockShares of clothing and accessories retailer American Eagle Outfitters enjoyed a nice 10% rally over the past month, bringing year-to-date gains to 41%. AEO stock now trades around $28.08, and Wall Street forecasts more upside ahead.
The median price target on the shares is $41.50, implying an additional 48% increase from current levels. Achieving that price target would be an impressive feat indeed. And strong third-quarter earnings results could be a catalyst for the stock. Analysts forecast that American Eagle should announce Q3 EPS of 60 cents and revenues of $1.22 billion.
The Pittsburgh-based company’s shares got a lift recently after it was announced that American Eagle Outfitters is buying Quiet Logistics for $350 million in cash. Quiet Logistics is a supply chain operator that uses state-of-the-art technology and robotics to provide cost-effective in-market fulfillment services.
American Eagle says the deal will enable it to improve its supply chain processes, including adding physical distribution hubs near major America cities such as Boston, Chicago and Los Angeles. The deal was well-received by investors, who pushed AEO stock higher on the news.
Earnings Reports: Abercrombie & Fitch (ANF)
Source: ShutterstockLastly, next week we’ll hear from New Albany, Ohio-based Abercrombie & Fitch, the popular retailer that specializes in casual wear.
Among clothing retailers, ANF stock has been a standout this year, returning 132% to shareholders through the last 11 months. The share price is now around $47.55 and continues to run hot despite its massive gains year-to-date. Over the last month, Abercrombie & Fitch’s stock has jumped 20%.
Could the shares selloff after the company delivers third-quarter results on Nov. 23? Not if the company beats the consensus expectations of analysts who are calling for Abercrombie to announce EPS of 64 cents per share and revenues of $891 million.
Helping to drive ANF stock to new heights this year has been the company’s announcement that it is expanding its same-day delivery service across all 540 of its Abercrombie & Fitch, Abercrombie Kids, Hollister and Gilly Hicks stores, through partnerships with several delivery companies, including Uber (NYSE:UBER).
The same-day delivery service proved extremely popular with customers during Covid-19 lockdowns and Abercrombie & Fitch now sees an opportunity to take the offering nationwide. That kind of innovation and expansion is why so many analysts and investors on Wall Street are high on Abercrombie & Fitch stock.
On the date of publication, Joel Baglole held a long position in BBY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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