The week ahead will likely bring more volatility, particularly for shareholders of Dave & Buster's (NASDAQ:PLAY), H&R Block (NYSE:HRB), and Michaels (NASDAQ:MIK) as each of these companies is set to announce quarterly earnings results over the next few days. Let's look at a few key trends to watch for in the reports.
Dave & Buster's traffic trends
After trouncing the market in the years following its 2014 initial public offering, Dave & Buster's shares have gone through a rough patch recently. Investors pushed the stock lower this year after sales growth slipped into negative territory. It turns out that competition is finding ways to pawn off some of the restaurant chain's casual customers, and the rise of home food delivery isn't helping protect customer traffic trends, either.
Those struggles will keep investor attention on key growth metrics like comparable-store sales when Dave & Buster's reports earnings results on Monday afternoon. CEO Steve King and his executive team are hoping to get sales moving in the right direction again with help from smaller store concepts and a shift in the brand that better highlights its entertainment aspects.
They're seeing strong returns from new store openings, too, but Wall Street might not celebrate those wins on Monday if Dave & Buster's remains on pace to post its second straight year of declining sales at existing locations.
H&R Block's return volume
Tax preparation specialist H&R Block will announce its fiscal fourth-quarter results on Tuesday afternoon in a report that's likely to have good news for investors. After all, the company got off to a strong start in the initial weeks of tax season, and that early momentum apparently held up through the quarter. In late April, executives said H&R Block had handled 19.9 million returns this year to mark a 3% boost over the prior year. That amounts to a solid turnaround, considering return volume declined in 2017.
Besides the final volume figures, investors will be following the mix of assisted and do-it-yourself returns. Gains in both segments will likely be required if H&R Block is going to reach management's fiscal-year goal of modest sales growth and steady profitability.
Assuming it meets those targets, the company may make changes to its capital return program, including by boosting its dividend payout, which currently yields more than 3.5%.
Investors are bracing for some bad news from Michaels on Thursday. The arts and crafts retailer met management's expectations at its last quarterly outing, but CEO Chuck Rubin and his team also issued a tough outlook for fiscal 2018. Specifically, they see sales potentially dipping into negative territory for the first time in years. Profitability is also set to decline as Michaels invests in store remodels and in extending its e-commerce capabilities. Overall, fiscal 2018 should amount to an investment year that, executives say, "will position us to increase our market share and expand our leadership in the arts and crafts channel."
For signs that this transition is going as planned, investors will be following sales growth figures this week, which should hold steady compared to the prior quarter's 0.9% uptick. Operating margin will be key to watch over the next few quarters, too. That figure dipped to 13.7% of sales last year from 13.8%, but it's likely to fall harder as Michaels works to transition itself into a multichannel retailer.