Can Nordstrom Or Office Depot Rise Above Low Retail Earnings Expectations?

• The big retailers are set to begin reporting their most recent quarterly results this week.
• Mixed results from two of them are the best that analysts expect to see this week.
• Yet both of those companies have tended to exceed earnings expectations in recent periods.

The second-quarter earnings reporting season has begun to wind down, which means it is time for the big-box stores and the major department stores to begin sharing their latest quarterly results. Given how much the brick-and-mortar retail industry is hurting these days, it no doubt comes as little surprise that Wall Street expectations are low. But a couple of them could shine this week if they can manage to keep up their recent habit of exceeding expectations.

For the period when rumors swirled that Nordstrom, Inc. JWN might be taken private, which provided the stock a nice bump, Wall Street analysts are looking for a year-over-year decline on the bottom line but marginal growth in its revenues.

On the other hand, the consensus forecast for Office Depot Inc ODP calls for rising earnings, despite a sizable drop on the top line when compared to the same period of last year. The company did agree to a private equity buyout during the latest period, and it may yet be in talks with failed merger partner Staples, Inc. SPLS.

Nordstrom

When this Seattle-based upscale retailer shares its fiscal second-quarter results after the closing bell Thursday, the analysts on average predict that it will post 63 cents per share in earnings. That would compare to the 68 cents a share reported a year ago. And the $3.74 billion in expected revenue would be the highest seen in the past eight quarters, if the Christmas season periods are excluded. It would also be up less than 3 percent year over year.

The forecast from 34 Estimize respondents sees Nordstrom's earnings per share at the 66 cents, and their consensus revenue estimate for the most recent period is pegged at $3.73 billion. Like the Wall Street analysts, Estimize has handily underestimated the bottom line results in the past four quarters.

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Office Depot

Wall Street's consensus forecast calls for EPS at this big-box officer supply store operator to have risen by a nickel from in the same period of last year to 8 cents. The seven Estimize respondents have a consensus estimate that is a penny a share more than that for the three months that ended in June. Note that EPS results topped both Estimize and Wall Street expectations in two of the previous three periods.

Estimize overestimated revenue in the prior quarter, and this time the respondents are looking for $2.44 billion. That would be more than 24 percent lower than the figure posted in the year-ago quarter, as well as the lowest level in the past two years. It also is the same as the Wall Street revenue forecast. Look for Office Depot to share its fiscal second-quarter results first thing Wednesday morning.

And Others

Other retailers also stepping into the earnings spotlight this week include department store operators J.C. Penney, Kohl's and Macy's. Wall Street analysts expect to see a net loss from the former and shrinking top and bottom lines from the latter two.

The following week, the retail earnings parade continues with reports due from Alibaba, Gap, Home Depot, Target, Urban Outfitters, Walmart and many more.

Other companies predicted to show at least some year-over-year earnings growth when they reveal their results this week include CBS, NVIDIA, Petrobras and Priceline. But consensus forecasts call for shrinking profits from Avis Budget, Dean Foods, Marriott, Sunoco, Twenty-First Century Fox, Tyson Foods, Valeant Pharmaceuticals and Walt Disney, as well as a net loss from Hertz Global and Tenet Healthcare.