Wall Street was feeling particularly chatty this week as market watchers prep for the release of second-quarter earnings reports from footwear and apparel’s publicly traded heavy hitters.
With Wolverine World Wide Inc., Under Armour Inc. and VF Corp. up first on the docket to report Q2 earnings, analysts have been weighing in with expectations and highlights for both firms. There has also been some buzz on Shoe Carnival Inc. and Caleres Inc. this week.
Here’s the breakdown.
Wolverine World Wide Inc.
The Rockford, Mich.-based company behind Merrell, Saucony, Stride Rite and Sperry is scheduled to release its earnings on July 21, 2015.
“Our channel checks reveal that canvas and fashion-athletic sneakers performed well during Q2, boding well for Sperry’s top-line results,” wrote CL King & Associates analyst Steven Marotta on July 9. “Expectations for the brand are relatively muted, however, as an earlier Easter pulled forward some shipments into Q1 from Q2.”
Marotta said he expects Sperry to report flattish sales growth for Q2 compared with the same period last year, and he predicts that Merrell’s constant-currency sales growth will be in the mid-single-digit range.
Regarding the stock, Susquehanna Financial LLLP analyst Christopher Svezia said the firm has seen “mixed brand performance against a generally fair valuation.”
Wolverine also announced this week that it has amended and extended its senior secured credit facilities. The amended credit agreement consists of a $450 million term loan and a $500 million revolving credit facility, an overall facility increase of $300 million.
Under Armour Inc.
Sterne Agee CRT analyst Sam Poser says the Baltimore-based athletic footwear and apparel company is his number one stock pick for long-term investors.
When the company posts Q2 earnings, on July 23, 2015, Poser said he expects an in-line or better performance—noting that he sees strength in footwear across the board, with basketball driving the largest growth. He also predicts that guidance will be raised.
Svezia was short and to the point, in his July 14 note, saying “expectations [for Under Armour] are high with consensus above guidance, we’ll be patient on valuation.”
The parent company of Vans, Timberland and The North Face is slated to report Q2 earnings on July 24, 2015.
“We expect [VF Corp.] to report in-line 2Q EPS of 36 cents as momentum in Outdoor & Action Sports, led by The North Face, Vans, and Timberland, as well as a continued recovery in Jeanswear, are tempered by continued FX pressures,” wrote Nomura Securities International Inc. analyst Robert Drbul in a July 14 note.
On the stock front, Svezia said he sees “strong global growth brands balanced against key investments and F/X pressure.”
When VF Corp. reported Q1 earnings, on May 1, the results were in-line with Wall Street’s expectations but showed 3 percent declines in net income and flat EPS year-over-year, driven by FX pressures.
Poser hosted investor meetings last week with Caleres CEO Diane Sullivan, CFO Ken Hannah and VP of Investor Relations Peggy Tharp.
“We came away confident that Caleres will achieve record operating margins this year — we are forecasting 5.4 percent — and that the company is well on its way to achieving 8 percent,” Poser wrote on July 13.
Poser’s other takeaways include: Contemporary Fashion brands such as Sam Edelman, Vince and Diane Von Furstenberg are likely to remain the fastest-growing brands for some time to come; a men’s initiative is under way, beginning with Brown Boot Makers; and that in order to offset labor-cost increases, Caleres has reduced production in China from 95 percent to 80 percent, with shift to Vietnam.
Caleres is expected to report Q2 in late August.
Shoe Carnival Inc.
Poser also hosted meetings with Shoe Carnival CFO Kerry Jackson last week.
“We came away confident that the company is positioned well to harvest a great deal of low-hanging fruit now and in the foreseeable future,” wrote Poser on July 12.
Of the firm’s second quarter, Poser said, “Despite the shift of tax-free holidays from July to August in a number of states, we are forecasting [same-store sales] of 3 percent in 2Q as compared to the 1 percent consensus estimate.”
Poser’s takeaways include: Shoe Carnival’s management expects e-commerce to equal 5 percent of total sales within the next three years and 10 percent of sales over time; loyalty-program members account for 49 percent of sales; management expects loyalty members to account for over 70 percent of sales within the next couple years; and real estate efforts are improving, though 45 stores are underperforming and will be closed over the next three years.
Shoe Carnival posted earnings for Q1 on May 20, 2015, that missed Wall Street’s estimates for revenues but showed gains in profits, earnings per diluted share and net sales.
The firm is expected to report second-quarter earnings in early September.