Markets

Apparel Stock Earnings Slated for Oct 27: HBI, COLM & More

The Q3 earnings season is underway, with results announced so far displaying an improvement from the dreary results of the preceding quarters. The quarter is anticipated to show growth after five quarters of back-to-back decline. According to the Earnings Preview report, of the 116 S&P 500 members that have reported Q3 results so far, 80.2% have posted positive earnings surprises and 62.9% have come ahead of top-line expectations.

However, the Consumer Discretionary sector is showing positive signs with total earnings expected to decline marginally by 0.1%, while revenue is anticipated to surge 11.7%. As of Oct 21, 17.1% of the total number of S&P 500 companies in this sector have reported their results, wherein 83.3% beat both earnings and revenue estimates.

The apparel sector is a part of the consumer discretionary sector. The industry is constantly grappling with issues like competition and declining footfall. Here, change is the only constant and the players are under perennial pressure to strike the right chord with the fashion conscious consumers. Meanwhile, an increasing number of customers are resorting to online buying which has dealt a major blow to apparel retailers who are dependent on mall traffic to drive growth.

Let's take a look at what's in store for three major apparel stocks which are scheduled to release their quarterly numbers on Oct 27.

We start with Hanesbrands Inc.HBI , which is scheduled to report third-quarter 2016 results after market closes. The company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). Meanwhile, the Zacks Consensus Estimate for third-quarter earnings is pegged at 56 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

The Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.

HANESBRANDS INC Price and EPS Surprise

HANESBRANDS INC Price and EPS Surprise | HANESBRANDS INC Quote

Last quarter, the company posted a negative earnings surprise of 1.92%. In the trailing four quarters, the company delivered negative surprises in two quarters and positive in the other two, with an average beat of 5.76%.

Meanwhile, the company's Innovate-to-Elevate strategy along with its focus on high-margin products should favor third-quarter margins. Hanesbrands' latest innovation- the Fresh IQ odor technology used in both Innerwear as well as Outerwear segments was received well by customers. The products are expected to contribute to results in the third quarter. However, a challenging operating environment, macroeconomic uncertainty and unfavorable inventory levels are likely to be the primary headwinds for the company. (Read more: Hanesbrands: What's in Store this Earnings Season? )

Next, let's take a sneak peek at Columbia Sportswear CompanyCOLM which is also slated to report third-quarter 2016 after market close. The company has an Earnings ESP of 0.00% and a Zacks Rank #4. Meanwhile, the Zacks Consensus Estimate for third-quarter earnings is pegged at $1.17.

It has topped earnings estimates consistently in the trailing four quarters, with an average of 22.9%.

While Columbia Sportswear possesses a strong earnings surprise history, things don't appear to be rosy for the upcoming third-quarter results. Just like the other apparel companies, Columbia Sportswear remains susceptible to the global economic challenges, which also impacted its results in the previous quarter. Further, the company continues to expect foreign currency headwinds to hurt its results, as is reflected by its outlook.

COLUMBIA SPORTS Price and EPS Surprise

COLUMBIA SPORTS Price and EPS Surprise | COLUMBIA SPORTS Quote

Management's 2016 outlook incorporates anticipated effects of recent macroeconomic headwinds like bankruptcies of several U.S.-based wholesale customers, 2016 advance orders in response to slowing traffic and the lingering effects of last year's warm winter along with the further deterioration of the overall Korean outerwear market. (Read: Will Columbia Sportswear Q3 Earnings Ruin Trend? )

Deckers Outdoor Corp.DECK is slated to report second-quarter fiscal 2017 results. In the trailing four quarters, it outperformed the Zacks Consensus Estimate by an average of 25.2%. Deckers has an Earnings ESP of -5.88% as the Most Accurate estimate stands at $1.12, while the Zacks Consensus Estimate is pegged higher at $1.19. The company carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP but an ESP of -5.88% makes surprise prediction difficult. You can see the complete list of today's Zacks #1 Rank stocks here.

Deckers is focused on expanding its brand assortments, bringing more innovative line of products, targeting consumers digitally via marketing and sturdy eCommerce initiatives. Further, it is optimizing omni-channel distribution as well. Additionally, the company has announced a restructuring plan that focuses on realigning its brands into two groups, along with optimization of its store fleet. Management envisions second-quarter net sales to be up 1−3% and earnings in the band of $1.12-$1.22 per share.

DECKERS OUTDOOR Price and EPS Surprise

DECKERS OUTDOOR Price and EPS Surprise | DECKERS OUTDOOR Quote

However, the company's over-reliance on the UGG brand is a matter of concern, which plunged almost 20% during the first quarter. Moreover, foreign currency headwinds and stiff competition are likely to play spoilsport in the quarter to-be-reported. (Read: Deckers Q2 Earnings: What's in Store for the Stock? )

Carters Inc.CRI is slated to report third-quarter fiscal 2017 results. In the trailing four quarters, it outperformed the Zacks Consensus Estimate by an average of 7.58%. Carters have an Earnings ESP of 0.00% and a Zacks Rank #3. Meanwhile, the Zacks Consensus Estimate for third-quarter earnings is pegged at $1.68.

CARTERS INC Price and EPS Surprise

CARTERS INC Price and EPS Surprise | CARTERS INC Quote

Stay tuned! Check later on our full write-up on earnings releases of these stocks.

Zacks' Best Investment Ideas for Long-Term Profit

Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CARTERS INC (CRI): Free Stock Analysis Report

DECKERS OUTDOOR (DECK): Free Stock Analysis Report

COLUMBIA SPORTS (COLM): Free Stock Analysis Report

HANESBRANDS INC (HBI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

DECK CRI COLM HBI

Other Topics

Earnings Stocks

Latest Markets Videos