Market Watch: Brown, DSW on Q1… Skechers’ Clippers Bid

The Week Ahead

Tuesday, May 27:
U.S consumer confidence index for May
U.S. durable goods orders for April

Wednesday, May 28:
Brown Shoe Co. Q1 results
DSW Inc. Q1 results
Michael Kors Holdings Ltd. Q1 results

Thursday, May 29:
Abercrombie & Fitch Co. Q1 results
U.S. initial weekly jobless claims
U.S. continuing weekly jobless claims

Friday, May 30:
Genesco Inc. Q1 results
U.S. consumer spending for April

Stock Watch

Investors will be looking for an update on the state of the budget-conscious consumer when Brown Shoe Co. and DSW Inc. report their first-quarter results this week.

Analysts downgraded their estimates for competitor Shoe Carnival Inc. after its results missed the Street’s expectations, so market watchers will be seeking further commentary on any shift in market share.

According to analysts polled by Yahoo Finance, Brown Shoe is expected to post diluted earnings per share of 31 cents on revenue of $592.5 million.

For DSW, the Street is guiding for EPS of 48 cents and sales of $622.4 million.

“Overall [for DSW], we see the first quarter as a mixed bag with the potential for positive comments on current business trends, as well as positive results from a systems initiative,” said Camilo Lyon, an analyst at Canaccord Genuity.

“While we believe DSW experienced traffic declines during a weather-challenged first quarter, our checks suggest the value segment of the market in which DSW participates fared relatively better than the mid-tier department store channel,” Lyon added.

Meanwhile, shares of Skechers USA Inc. rose 1.8 percent, or 78 cents, to $43.23 following reports that the company’s CEO, Robert Greenberg, has teamed up with Relativity Media CEO Ryan Kavanaugh as a potential bidder for the Los Angeles Clippers.

Skechers said earlier this month that it was exploring a possible bid for the team but then downplayed that possibility when the stock plunged in response to the news.

Sam Poser, an analyst at Sterne Agee, said that while he doubted the success of any potential bid by the duo, the public relations impact was a success.

“We believe the report, but do not believe that the combined entity will be successful in buying the Clippers, especially when major well-capitalized players, such as Guggenheim Partners, Steve Ballmer and others are in the bidding mix,” Poser said.

“We are meeting with Skechers’ management at next week’s FFANY shoe show in New York and intend to get more color on what’s going on with all the noise around the Clippers and Skechers. In the meantime Skechers’ business remains very strong,” he added.

Next week looks to be a busy one for the footwear sector. The Footwear News Summit is scheduled for June 2 and coincides with FFANY market week and the Council of Fashion Designers of America awards.

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