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Earnings Preview: What to Expect When Nike, DSW and Shoe Carnival Report This Week

Industry buzz about weather woes, inventory backlogs from the port dispute and currency trends should make for an eventful week of earnings releases from footwear power players Nike Inc., DSW Inc. and Shoe Carnival Inc. Let’s take a look back at these companies’ performance in the last quarter and check in with analysts on what to expect.

Nike

For the previous quarter, which ended on Nov. 30 2014, Nike continued its track record as a top performer, posting $7.4 billion in earnings and net earnings of $655 million, or 74 cents per diluted share, compared with $534 million, or 59 cents per share, in that quarter’s year-ago period.

The company has a reputation for staying ahead of the competition, but analysts have been noticeably more cautious in their estimates for this quarter, citing concerns about the strengthening dollar.

Christopher Svezia, an analyst at Susquehanna International Group, said in a note last week Nike’s “core [is] playing good offense, but currencies [are] playing better defense,” and lowered his FY15 estimates for EPS to $3.52 from $3.56.

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Similarly, Sterne Agee analyst Sam Poser lowered his 3Q EPS estimate from 82 cents to 81 cents due to adverse currency shifts.

“We expect Nike to continue its aggressive spending for the foreseeable future and to see little upside to current estimates, especially given FX pressures,” Poser said in a note this morning.

DSW

In November 2014, DSW posted 3Q profits of $49.6 million, or 55 cents per diluted share, down from the previous year’s profits of $55 million, or 60 cents per diluted share.

Last week, several analysts raised their 4Q price targets and ratings for the footwear and accessories retailer, citing better product offerings, solid technology investments and favorable weather.

Wunderlich Securities analyst Danielle McCoy said in a note that “improving business trends, driven by better product assortment, more favorable weather vs. last year, and the port strike potentially acting as a one-time benefit …” should help the company’s performance.

Camilo Lyon, an analyst at Canaccord Genuity Inc., was also optimistic about DSW’s results, upgrading his rating to “buy” from “hold” in late February. Lyon noted that the massive inventory backlog at the West Coast ports might benefit DSW by delivering a discounted buying opportunity.

Shoe Carnival

The Evansville, Ind.-based retailer posted net earnings of $10.8 million for the third quarter of fiscal 2014, or 54 cents per diluted share — ever-so-slightly down from the year-ago third quarter’s net earnings of $10.9 million, or 54 cents per diluted share. Net sales in 3Q however, exceeded company guidance with an 8 percent increase, to $254.7 million, compared with the same quarter a year ago.

Shoe Carnival reports on March 18, Svezia said in a note today, “as with others, expect a choppy start to 1Q. That said, we believe there are many positive initiatives intact to benefit as the year unfolds.”

Svezia added that he anticipates 4Q EPS of 9 cents and strong comparable-store sales, driven by a healthy boot season and easy compares.

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