Retail Earnings Expectations: Office Depot And Whole Foods

• Reports from two specialty retailers will be earnings highlights this week.
• Wall Street analysts expect mixed results both of them.
• Just one of them has topped earnings expectations the past two quarters.

As the first-quarter earnings reporting season is just beginning to wind down, it is about time for the big retailers to share their latest results. Overall, corporate earnings have been strong enough to help keep the markets near all-time highs. However, the retail sector is a different story, which may explain the Wall Street expectations for specialty retailers Office Depot Inc ODP and Whole Foods Market, Inc. WFM, both due this week.

The Wall Street consensus forecast calls for the former to show modest bottom line growth, despite a sharp decline in revenue, in the period when it named a new chief executive officer. Meanwhile, the latter is expected to post smaller earnings than a year ago, but with revenue that was essentially flat. In that time, traffic trends at Whole Foods continued to suffer and the company remained a speculated buyout candidate.

Office Depot

When this office supply giant shares its first-quarter results before the opening bell Tuesday, analysts on average predict it will post $0.12 per share in earnings. That compares to the $0.11 per share in the prior quarter and $0.10 a year ago. And the $2.71 billion in expected revenue would be down more than 23 percent year over year. Note that earnings per share topped consensus estimates by a penny in the previous two quarters.

The forecast from seven Estimize respondents is the same on the bottom line, with EPS expected to come in at $0.12. That would be the second-highest level in the past six periods. And the consensus revenue estimate for the three months that ended in March is also $2.72 billion. That would be the lowest level in the past two years.

Whole Foods

Wall Street's consensus forecast calls for EPS at the struggling upscale supermarket operator to have slipped from $0.44 in the same period of last year to $0.37. The 37 Estimize respondents have a consensus estimate of $0.38 per share for the three months that ended in March. However, EPS fell short of Estimize expectations in two of the previous three periods.

Estimize overestimated revenue in the previous quarter, and this time the respondents are looking for $3.72 billion. That would be barely up from the $3.70 billion reported in the year-ago quarter, and it also compares with the Wall Street consensus forecast of $3.73 billion. Look for Whole Foods to share its first-quarter results late Wednesday.

And Others

Later in the week, some prominent department store operators take their turns in the earnings spotlight, kicking off the retail earnings parade that continues for the next couple of weeks or so. At least this week, hopes don't seem very high. Both Kohl's and Macy's are expected to offer up declines on the top and bottom lines. Earnings at Nordstrom will be about the same as a year ago, if the analysts are correct, and another net loss is predicted for J C Penney.

The following week, keep an eye out for earnings reports from American Eagle Outfitters, Gap, Home Depot, Target, TJX, Urban Outfitters, Wal-Mart and more.

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