NEW YORK (TheStreet) -- It shouldn't take much for department stores to beat expectations when they report second-quarter earnings this week.
After months of cost cuts and the streamlining of operations, even just a moderate comeback in sales should provide earnings leverage for the stores.
But investors will really be focused on managements' outlook for the second-half of the year, as a consumer slowdown in spending once again looms, and severe discounting threatens margins.
Fitch Ratings predicts department store sales will be up about 1% in 2010 and 2011, better than its previous estimate of a decline between 1% and 2% for the year.Of course, there will be both winners and losers within the sector. Those department stores that have invested in stores even amid the recession -- improving brands and adding private labels -- and those that have continued to focus on value, will likely come out on top. These winners will succeed at the expense of those other players that continue to execute poorly, have underinvested, or are unable to invest appropriately in their store base, according to Fitch Ratings. Meanwhile, department store results will also set the tone for the retail as a whole, as they kick off the earnings season for the sector. So settle in and click on for a preview of how department stores will fare in the second quarter....
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV