Retailers Hope for a Winter Wonderland

NEW YORK (TheStreet) -- Summer may finally have reared its hot, humid head in many parts of the country this week, but retailers already have visions of sugar plums dancing in their heads.

And it's not because they have a particular fondness for carols and gingerbread men.

Indeed, as the usually reliable back-to-school season is already proving to be a non-factor this year, retailers are, out of sheer necessity, shifting their focus to the next major selling event: the holidays.

And while analysts are predicting dismal fall numbers, they're postulating that the weeks leading up to Christmas could well be merry. And the proof in that pudding should soon come, as retailers report their second-quarter earnings -- and second-half outlooks -- over the next several weeks, starting with Macy's(M Quote), Wal-Mart Stores(WMT Quote), Kohl's(KSS Quote), J.C. Penney(JCP Quote) and Abercrombie & Fitch (ANF Quote) this week.

The numbers themselves will likely come as little surprise to investors, given that retailers have been revising and updating guidance throughout the quarter. Still, other clues in the reports should shed some insight into the upcoming holiday season.

For starters, advises Scott Krugman, spokesperson at the National Retail Federation, look to the merchandise that's leading profit increases or decreases. "See if necessities are still driving sales, or if discretionary apparel and accessories are having some pull," he says.

Jewelry sales, for example, could be a good indicator for recovery. "If we see jewelry start to improve, it means consumers are willing to spend on other things besides socks and underwear," Krugman says.

Needham analyst Christine Chen also says to pay close attention to the tone of the companies. Does management believe we have reached bottom or are they expecting more weakness?