Most sectors have already enjoyed their time in the spotlight this earnings season, but one that has yet to really take center stage is the retail sector. Now is a crucial time for retailers, with the holiday season upon us, so Wall Street will be paying extra attention to third-quarter reports that are about to occur.
Some big names have already released the results of their most recent quarter, but industry heavyweights such as Target (TGT) and Costco (COST) have yet to report. These are the companies that can really tell the tale of what is happening in the sector, and will provide some good insight into the health of the overall economy and consumer sentiment.
Overall, the mood is good regarding retailers headed into the upcoming holiday season. Analysts expect retail sales to rise around 4.1% from last year, which should lead to strong numbers for most retailers, but as evident in the limited number of retail earnings reports we have see thus far for the third quarter, things may not be as good as everyone believes. There have been some mixed results, which signals that some retailers will benefit from a strong holiday season, while others may be forced to offer deep discounts and promotions to get shoppers in their stores.
Of course, the deeper the discounts, the bigger the impact they have on gross margins and consequently earnings, so investors should be aware of the fact that there are going to be some retailers that struggle this holiday season, despite all the upbeat forecasts regarding the sector as a whole.
Let's take a closer look at five retailers that have already reported their numbers for clues as to what to expect from the rest of the sector moving forward.