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5 Things to Watch This Earnings Season

MILLBURN, N.J. (TheStreet) -- The third-quarter earnings season is upon us. As always during an earnings season, we need to prepare for and anticipate the messages that corporate America will send us via companies' results and their guidance for the quarter and year ahead.

With that in mind, here are the five things I will be most tuned in to:

1. Back-to-School Sales: Back-to-school sales were expected to be weak. So far we have some same-store sales data for retailers for the month of August. September has yet to be reported. Preliminary indications are that back-to-school sales were better than expected with a great deal of variance from company to company.

For example, Urban Outfitters (URBN) remains strong, while Abercrombie & Fitch (ANF) continues to struggle. Dell Computer (DELL) computer, which relies heavily on back-to-school sales, did not provide guidance for the third quarter but noted that the market has stabilized.

As the quarterly results begin to trickle in, back-to-school sales are going to be a key indicator for the strength of the consumer and may help us to establish a baseline for holiday sales.

2. Holiday Sales: We are less than two months away from Black Friday, the first frenzied sales day after Thanksgiving when shoppers and the media storm retailers' doors as the official holiday shopping season gets under way. During earnings season, companies will provide investors with a glimpse into the holiday selling season in several ways.

First, we will get an indication how retailers are gearing up for the holidays in terms of their merchandise orders and how inventories are currently being managed. Second, we will get a feel for which products or product lines are going to be hot and which are not. Here's a hint: Sales of Beatles Rock Band are tremendous. This could have an impact on holiday sales for the likes of GameStop (GME) or Best Buy (BBY).

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