Retail sales rely on the whims and preferences of consumers. But not all retailers rely heavily on year-end holiday sales. Disappointing fourth-quarter result can be overlooked if guidance is strong, and conversely, a strong quarter can be ignored if guidance disappoints. But a strong report and a solid outlook? Now that bodes well for any stock.

Coca-Cola (KO - Get Report) will report earnings on Thursday and PepsiCo (PEP - Get Report) will report on Friday. For Coca-Cola, its fourth quarter is typically its lowest revenue period of its fiscal year. For PepsiCo, though, Q4 is generally its highest period for revenue.

Apparel makers like Canada Goose (GOOS - Get Report) , which reports on Thursday, or Fossil Group (FOSL - Get Report) , which reports Wednesday, generally see the most sales in the fourth quarter. However, the rest of the year is much less balanced than for consumer stocks like  Pepsi. 

Fourth-quarter-dependent retailers have to nail Q4 as that's when a bulk of their business takes place. That said, guidance has to be solid, too, because investors don't want to buy and/or own a stock that's going through an "as good as it gets" situation. Meaning, if the last three months of business were great, but the next nine are going to be disappointing, why own it?

Meanwhile, the rising dollar won't do any favors for U.S. retailers with large international exposure. That said, consumers are seemingly taking a break after a robust holiday period and we'll have to listen to these companies' conference calls carefully to see if that's a larger trend taking hold in Q1 or if it's seemingly a one-month breather.

Holiday sales did well, but how much of a 'sales hangover' will consumers experience?
Holiday sales did well, but how much of a 'sales hangover' will consumers experience?

Fourth Quarter and Ahead

The U.S. dollar was seemingly under pressure coming into the fourth quarter, but has been rebounding since the start of October. In fact, the dollar's 52-week low was made about a year ago, while earlier this week the currency just about hit its 52-week high. That swing isn't good for retailers -- or any U.S. company -- with international exposure.

It forces us to consider what implication the dollar may have on companies like PepsiCo, Coca-Cola and Kraft Heinz (KHC - Get Report) when they report earnings and provide their outlooks.

Aside from the dollar, we've had a somewhat mixed bag as it pertains to economic data. New home sales from November (a lagging indicator, obviously) surged according to the report in late January, with sales jumping almost 17% and vastly ahead of the 2.9% estimate. However, existing home sales data were expected to fall just 1% in January from December. Instead they fell 6.4%. As I said, mixed bag.

We can't glean too much information off those two figures alone.

Case in point, we had a strong new vehicle sales number in January (measuring December) but a softer-than-expected result in February (measuring from January). Further, the Michigan Consumer Sentiment gauge missed badly in January, coming in at 90.7 vs. 97, while February's 91.2 edged past expectations of 90.8. That said, the jobs reports have been robust thus far.

So what's the bottom line?

While we may see some conservative outlooks from management, U.S. consumers are likely to stay optimistic so long as they have a job. And according to the monthly payroll reports, employment isn't an issue.

Let's see how the companies do the next few weeks.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.