What to Watch on Wall Street This Week: Retail Reports; Gaming Gets an Extra Life

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Howard SternWhat's got Wall Street and Main Street buzzing right now? Here are some of the items that will help shape the week that lies ahead.

1. Game Off or Game On?: Last week was rough for video game fans. Two companies announced delays of upcoming titles. GameStop (GME), the leading video game retailer, announced a 12.5% slide in same-store sales for its latest fiscal quarter.

The clincher came on Thursday night, when sales tracker NPD Group reported that new software disc sales fell a mind-numbing 42% in April.

Hope arrives in small boxes tomorrow.

Activision Blizzard's (ATVI) Diablo III and Take-Two Interactive's (TTWO) Max Payne 3 hit retailers tomorrow. Max Payne 3 is the previously delayed installment in Take-Two's popular third-person shooter franchise. It will be available for Xbox 360 and PS3 consoles as well as a PC game. Diablo III will be the bigger release. Amazon recently revealed that Diablo III has become the online retailer's most pre-ordered PC game of all time. Even if it's only a computer game, it will get plenty of die-hard gamers excited.

2. He's a Stern Judge: Radio shock jock Howard Stern leaps into prime-time television as the new judge on America's Got Talent this week.

His arrival has been hyped up by NBC for months. Stern even starred in a Super Bowl commercial earlier this year promoting his new gig.

It will be interesting to see what kind of effect this has on Sirius XM Radio (SIRI). Stern has more than three years left on his satellite radio contract, and his appearances on the TV show won't get in the way of his morning radio show. A bullish case can be made that Stern's star power will grow as the show reaches TV viewers, and that the exposure will result in new premium radio subscribers for Sirius XM.

The bearish side of the argument is that Stern recently came up short in a bid to sue Sirius XM for stock option grants that he claims were owed as part of the merger between Sirius and XM. If Stern uses his growing star power to badmouth Sirius XM or wiggle his way out of the contract, that would obviously be a negative for the media company.

3. What We Think About Penney's: When J.C. Penney (JCP) hired Ron Johnson as its new CEO, investors went wild. Johnson helped give Target (TGT) its "cheap chic" allure before heading over to Apple (AAPL) in time to launch the tech giant's wildly successful foray into retail.

The fruit of Johnson's turnaround labor was a new store layout that emphasizes popular brands and a "Fair and Square" pricing strategy offering everyday low prices instead of frequent sales and perpetual markdowns on older inventory.

We'll get a first taste on how shoppers are taking to the "Fair and Square" strategy that was implemented in February when the retailer reports tomorrow. Unfortunately, analysts are expecting a small deficit on a slight dip in sales.

4. Retail's Whales: J.C. Penney isn't the only retailer stepping up this week. Earnings season now shifts largely to stores. Many chains end their fiscal year by the end of January to fully account for holiday sales, returns, and gift card redemptions during final fiscal quarter.

We're now looking at the quarter ending in April, and it will be interesting to see if the unseasonably warm end to the winter season turned the snowbound into the mall-bound.

Walmart (WMT) and Target will give us a great snapshot of the discount department store space, while Gap (GPS), Saks (SKS), and Abercrombie & Fitch (ANF) are just some of the many mall names reporting.

Have those shopping bags ready for free-falling bargains on disappointing results.

5. Is Groupon a Good Deal Yet?: Groupon (GRPN) went public at $20 in November, and now that it's trading for roughly $10 we can all make the obvious joke that Groupon's stock is a Groupon deal itself at 50% off.

The daily deals leader has had a rough go as a public company and recently had to restate its financials because of a spike in refund requests.

Well, Groupon reports Monday. Cynics will scour the quarterly financials to see if the company's empire is coming undone, but at least Wall Street feels that Groupon will be profitable from here.

Longtime Motley Fool contributor Rick Munarriz does not owns shares in any of the stocks in this article. The Motley Fool owns shares of Apple. The Motley Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Take-Two Interactive Software, Apple, and Activision Blizzard. Motley Fool newsletter services have recommended creating a synthetic long position in Activision Blizzard, creating a diagonal call position in Walmart Stores and creating a bull call spread position in Apple.



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3 Comments

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talari

Howard isn't so shocking anymore.... Yawn..

May 15 2012 at 1:46 AM Report abuse rate up rate down Reply
RissasGran

Another program NOT to watch. Thought Howie Mandel was a big asset in replacing Hasselhoff but not enough to endure 5 minutes of Stern and his tirades/antics. America might have talent but Howard Stern does NOT.

May 14 2012 at 1:50 PM Report abuse +1 rate up rate down Reply
nomeaning695

What is amazing is that the world needs jobs which produce growth and tax rev... and what do voters do? They elect... Socialsit!

May 14 2012 at 12:57 PM Report abuse +2 rate up rate down Reply
petpetdonna

Stern brings his no talent personality to a reality TV show.

May 14 2012 at 12:16 PM Report abuse +2 rate up rate down Reply