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Earnings season for Canadian retailers wraps up with a flourish on Wednesday, as four of the country's biggest remaining retailers – representing a broad spectrum of markets and product lines from the top to the bottom – are set to report results for their October quarter and give an update on the prospects for this year's holiday season.
The elephant in the room that traders may be particularly concerned about is the impact of the bankruptcy and liquidation of Sears Canada. It remains to be seen if the Sears closeout sale will have its biggest impact on The Bay's higher-end lines, on specialty retailers like lululemon or Roots, or on discount retailers like Dollarama.
This is the first quarterly report from Roots following its big IPO and debut on the markets last month. As a newly public company, this first report could have a significant impact on expectations going forward and sentiment toward the stock for the coming year.
Heading into the results, shares of HBC, ROOT and LULU have been climbing The charts below, courtesy of our friends at EquityClock.com, show that retail stocks tend to finish off the calendar year strong, but not as strong as the broader market. Retail stocks tend to have a big holiday hangover and underperform in January. DOL has already shown signs of peaking, and while we could see HBC or LULU pop on the results, profit-taking against their news is possible. For ROOT, it's harder to say, since it has a very short price history.
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