5 Retail Stocks That Could Struggle During the Back-to-School Season

Hot temperatures might hurt consumer spending this Q3

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5 Retail Stocks That Could Struggle During the Back-to-School Season

Staples

StaplesLogo 5 Retail Stocks That Could Struggle During the Back to School SeasonSchool shopping isn’t all fun and games … unless you’re a nerd like me who counted down to color-coordinating three-ring binders and spiral notebooks. Either way, school supplies are another prominent part of the back-to-school shopping ritual.

A prime destination: Staples (SPLS). Most years, the third quarter contributes more than a third of the company’s unadjusted earnings … although that trend took an ugly reversal last year. The company posted a profit in every quarter of 2012 except the third, where it posted a big-enough loss for the full year to sink into the red thanks in part to restructuring and impairment charges.

Luckily, the back-to-school season is expected to return to its normal contribution level this year — around 35% of total earnings. And school supplies seem more of a necessity than a new T-shirt or pair of shoes.

Still, higher temperatures could push more shoppers to grab bargain notebooks at Dollar Tree (DLTR), Five Below (FIVE) or somewhere online. That’s a big red flag considering sales are already expected to again fall year-over-year, and the slightest slowdown could take earnings — now slated to be flat — with them.


Article printed from InvestorPlace Media, http://investorplace.com/2013/07/5-retail-stocks-that-could-struggle-during-the-back-to-school-season/.

©2014 InvestorPlace Media, LLC

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