Market Watch: Wolverine, Madden to Report as Earnings Ramp Up

The Week Ahead

Monday, April 28:
Nomura Securities Retail Conference, New York
U.S. pending home sales for March

Tuesday, April 29:
Wolverine World Wide Inc. Q1 results
Coach Inc. Q1 results
Big 5 Sporting Goods Corp. Q1 results
Columbia Sportswear Co. Q1 results
U.S. consumer confidence index for April

Wednesday, April 30:
Iconix Brand Group Inc. Q1 results
U.S. GDP for Q1
Barclays Retail & Consumer Discretionary Conference, New York

Thursday, May.1:
Steven Madden Ltd. Q1 results
U.S. initial weekly jobless claims
U.S. continuing weekly jobless claims
U.S. consumer spending for March

Friday, May 2:
U.S. unemployment rate for April
U.S. factory orders for March

Stock Watch

Wolverine World Wide Inc. kicks off a busy week of earnings with its first-quarter report on Tuesday. Analysts expect the firm’s performance for the period to reflect challenging retail trends caused by the prolonged winter and later Easter.

On the upside, Mitch Kummetz, an analyst at Baird Equity Research, said Wolverine’s performance in the second quarter to date is likely tracking better on improved weather and stronger-than-expected Easter sales.

“The company already provided first-quarter guidance that reflected some caution around top-line trends … given the expectation of continued harsh weather and sluggish retail trends, as well as a later Easter,” Kummetz said.

For the first quarter, Wolverine is guiding to a modest sales decrease on the prior corresponding period and earnings per share of between 29 cents and 30 cents, versus 41 cents last year. The Street has forecast a 3 percent dip in sales to $626.8 million for the period on diluted EPS of 30 cents.

“We don’t see any upside to the guidance as the quarter played out fairly consistent with these expectations,” Kummetz said.

“Wolverine expects stronger sales growth in the back half, but we wonder about Sperry [Top-Sider]’s fall pre-books coming off a challenging fourth quarter of 2013,” he added.

Also set to report on Tuesday is Coach Inc., which is expected to provide commentary on the pressured North American retail environment ahead of a brand repositioning year.

Ahead of the result, Michael Binetti, an analyst at UBS, lowered his 12-month price target for the stock to $49, from $50, citing increased competition and the need for the company to lift its advertising spending as it recruits new customers.

“We believe Street estimates for fiscal 2015 EPS to grow more than 8 percent during a major brand reposition year are unattainable,” he said. “We expect little change to deteriorating U.S. trends in the third quarter, considering new product won’t launch until fall, and believe fiscal 2015 Street estimates need to be revised lower, creating downside risk for Coach’s stock in the near-term.”

Paul Lejuez, an analyst at Wells Fargo, predicted Coach will report EPS of 60 cents for the third quarter, versus consensus forecasts of 62 cents.

“Similar to last quarter, we believe men’s and footwear performed relatively well, but women’s handbags — the bulk of the assortment — remained weak, despite some attractive textured leather styles,” Lejuez said.

Meanwhile, market watchers will be looking for signs of an uptick in women’s fashion trends when market darling Steven Madden Ltd. reports on Thursday.

According to Yahoo Finance, the consensus forecast among analysts is for EPS of 36 cents for the quarter. The company reported EPS of 35 cents for the same period last year.

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