The first quarter earnings season is almost over (91% of companies have reported) and the results, while not quite as dire as forecast just over a month ago, still led to the worst quarterly report since the financial crisis, mostly due to a widely expected collapse in energy revenues and earnings. However the big surprise was the disappointing misses in numerous consumer and retail stocks, the result of which was a plunge in the retail index.

… even though on Friday the US government reported that April retail sales that were supposedly the strongest in 13 months. The government data was so “good” in fact that even establishment economists such as Stephanie Pomboy of Macromavens did what we have repeatedly done in the past few months when she accused the government of fabricating the reported number by using a major seasonal adjustment gimmick as shown in the video below.

In the coming week, we will see the last batch of corporate reports, mostly out of retail stocks, as 12 of the 21 companies in the index scheduled to report earnings next week are retailers.

A quick glimpse at the woeful retail sector which is shaping up to be a continued story of improving internet retailers offset by deteriorating bricks and mortar outlets: of the 13 retail sub-industries in the S&P 500, eight have reported or are expected to report earnings growth, led by the Internet Retail sub-industry. Five of the retail sub-industries have reported or are expected to report a year-over-year decline in earnings, led by the Department Stores sub-industry. The Internet Retail sub-industry reported the highest earnings growth of all 13 retail sub-industries at 143.1%. Four of the five companies in this sub-industry reported earnings growth for the quarter, led by Amazon.com ($1.07 vs. -$0.12)

Some more details on the retail sector bifurcation from Factset:

The Home Improvement Retail sub-industry is projected to report the second highest earnings growth at 12.2%. Both companies in this sub-industry are predicted to report double-digit growth in EPS for the quarter. The mean EPS estimate for Home Depot for Q1 is $1.35, compared to year-ago EPS of $1.16. The mean EPS estimate for Lowe’s Companies for Q1 is $0.85, compared to year-ago EPS of $0.70. Home Depot is scheduled to release results on May 17, while Lowe’s Companies is scheduled to release results on May 18.

On the other hand, the Department Stores sub-industry reported the largest year-over-year decline in earnings of all 13 retail sub-industries at -47.8%. All three companies in this sub-industry reported a year-over-year decline in EPS of more than 25% for the quarter: Macy’s ($0.40 vs. $0.56), Kohl’s ($0.31 vs. $0.63), and Nordstrom ($0.29 vs. $0.66).

The Hypermarkets & Super Centers sub-industry is projected to report the second highest year-over-year decline in earnings of all 13 retail sub-industries at -14.1%. In this sub-industry, Costco has already reported results for Q1, while Wal-Mart Stores has yet to report results. The mean EPS estimate for Wal-Mart Stores is $0.88, compared to year-ago EPS of $1.03. Wal-Mart Stores is scheduled to release results on May 19.

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