Another retail destination that may seem like a back-to-school shop — maybe for no other reason than its department-store status that puts everything from jeans to shoes to backpacks on its shelves — is Macy’s (M). At Macy’s, though, the third quarter has been the lowest sales and earnings period for two of the past three years.
Last year, for example, the company’s unadjusted Q3 earnings were less than a fifth of its Q4 profit. Meanwhile, adjusted earnings for this year will get sliced in half from this quarter to the next; the 44-cent EPS slated for this fall will tally a mere 11% of the company’s full-year number.
Of course, that doesn’t mean expectations aren’t high in a relative sense. That EPS bar would be a 22% year-over-year climb — higher than the 18% growth expected in the current quarter and 14% expected for the full-year.
Still, a miss during back-to-school season likely won’t be as big a deal as a miss during the holiday season would be.
This last one may not be surprising to you, but it surprised me. Teachers often need back-to-school gear too; rival name Ann Inc. (ANN) actually got its largest chunk of sales during the third quarter last year. Still, Limited Brands (LTD) — whose Victoria’s Secret store is popular with girls of all ages thanks to products from its Pink clothing line to its brightly color panties – drops off pretty significantly during Q3.
The company’s Q3 was the lowest for sales in 2012, while it barely inched ahead of the first quarter the year before. And this year, third-quarter earnings will tally less than 10% of the year’s total.
Interestingly, Limited Brands stands out from its peers in another way too: The normally strong fourth quarter is actually even weaker on the earnings front for LTD … despite the fact its the leader for sales.
That sheds light on the tough reality of retail — especially during critical shopping periods. Blowout sales — whether during back-to-school or during the holiday season — can backfire if they slice away margins dramatically.
Luckily, compared to other periods of the year, investors are used to relatively subdued back-to-school numbers from these three names.
As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.