Stocks roared higher last week, buoyed by a surprisingly strong reading on the job market that suggests economic growth is firming up. The good news helped both the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) bounce back into positive territory for the year.
Earnings season is winding down, but a few big-name companies are still on deck to issue fourth-quarter results over the coming trading days. The most anticipated holiday reports will be coming from Dick’s Sporting Goods (NYSE: DKS), Ulta Beauty (NASDAQ: ULTA) and Tiffany (NYSE: TIF). Here’s what to look for in the announcements.
Dick’s Sporting Goods’ sales growth
Dick’s Sporting Goods will announce its holiday-quarter results before the market opens on Tuesday. The retailer didn’t have much good news for shareholders at its last outing. Comparable-store sales fell by 1% in the third quarter, which management said translated into market share gains in the contracting sporting goods industry. However, the company had to engage in deep discounting to achieve that modest revenue result as gross profit margin dove to 27.5% of sales from 30.5% in the prior-year period.
CEO Edward Stack and his team said in early November that they saw 2018 playing out in much the same way, with heavy promotions combining with increased spending to push earnings down by a brutal 20%. Comps were predicted to be flat to down slightly, indicating more market share gains. Investors will find out on Wednesday whether the last few months have shifted the retailer’s thinking on that mixed sales and profit outlook.
Ulta Beauty’s customer traffic
Investors aren’t expecting great news from Ulta Beauty when it posts its fourth-quarter results on Thursday. In its last report, the beauty products and spa services retailer noted hints of a slowdown in its core niche, makeup, which pushed sales growth lower and led to a reduced gross profit margin. All indications are that this trend continued into the holiday season. Supplier e.l.f. Beauty, for example, saw its sales growth pace dive to 7% over the holidays from 28% in the prior quarter.
Ulta Beauty isn’t projecting as dramatic of a decline for its business. In fact, management predicts fourth-quarter comps will rise by between 8% and 10%, compared to a 10% boost in the prior quarter. Investors will be looking for signs that Ulta had to ramp up its discounting to keep that healthy growth pace going, and they’ll be especially interested in CEO Mary Dillon’s forecast for 2018, given the volatile sales environment.
Tiffany’s 2018 forecast
We already know that the holidays were good for luxury retailer Tiffany. So good, in fact, that the stock recently hit an all-time high following the company’s holiday season sales announcement. In early January, executives said Tiffany’s sales rose by a healthy 5% worldwide and by 6% in the core U.S. market.
Investors will find out on Friday exactly how well that revenue growth translated into higher profits. Tiffany executives indicated that earnings for the full year should climb by around 7% above 2016’s $3.55 per share haul. The actual reported result will likely vary from that projection, though, as the impact of the tax law changes filter through the retailer’s financial statements.
Meanwhile, look for executives to provide more detail on Tiffany’s 2018 outlook that, as of early January, predicted modest sales increase and flat earnings as the company invests heavily in growth initiatives such as advertising, e-commerce, and store designs.
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