A strong U.S. dollar, the lingering impact of the West Coast ports shutdown and lousy weather in March are expected to weigh-down profits of public companies in a variety of industries — but retailers may get some spring in their step at last as pent-up demand and higher consumer confidence buoy the sector.

This story first appeared in the April 9, 2015 issue of WWD. Subscribe Today.

Analysts and economists are essentially writing off the first quarter for retailers, saying better times are ahead. Meanwhile, one analyst sees retail going through a “major transformation” and the innovators are from an unlikely channel: department stores.

On the broader earnings front, Estimize.com, which tracks all sectors of the S&P 500, said in its second-quarter profit preview that “you’d have to be living under a rock not to know about the tepid expectations.” The Estimize.com consensus expects the accumulative average profits of the S&P 500 to show a decline of 1.5 percent year-over-year and said “this would be the lowest growth rate since 2009.”

The topline is also pegged for a decline — about 1 percent down from the same period last year. That said, Estimize.com noted there’s strength in the consumer discretionary sector “with earnings growth expected to hit 15.4 percent and revenues of 7 percent.” Within this area, specialty retail — which includes apparel retailers — is expected to post an average earnings gain of 19.4 percent.

In a separate research report, IHS Global Insight chief U.S. economist Doug Handler said between trade flow interruptions, bad weather and weak consumer spending, the first quarter will be a washout for many companies. “Like last year’s first quarter, this period will not provide much guidance regarding longer-term economic trends,” Handler said. “Also like last year, a midyear rebound is expected.”

He added: “Measuring the impact of trade flows remains problematic with the rise in the dollar and the impact of the West Coast dock disruptions. Because of the port issues, both export and import volumes fell in the first quarter, but since imports fell more than exports, the narrowing trade deficit will add to GDP growth in the first quarter. A larger issue is that manufacturing and wholesale supply chains were interrupted, affecting shipments and production.”

That last point could spell trouble for certain specialty apparel retailers and department stores — several of which noted in quarterly reports last month that the disruptions at the ports already squeezed money from their bottom lines. Rising consumer confidence may help reverse some of these negatives. The Conference Board’s Consumer Confidence Index scaled more than the 100-degree mark for March following a decline in February, and a bold jump in January.

In a report issued by Morgan Stanley on Tuesday, analyst Paula Campbell Roberts said preliminary March sales data show an uptick for department stores. The “early read” has the segment posting a 0.9 percent sales gain for the month. “March department store sales likely improved month-over-month driven by more normalized weather and the Easter holiday shift,” she wrote.

At Telsey Advisor Group, Dana Telsey, chief executive officer, is fresh out of numerous meetings with retailers and vendors, and her “Big Picture Trend” is bright. “Coming out of fourth-quarter discussions regarding 2015 and beyond with corporate executives, sales associates and customers, the word ‘transformation’ is coming up regularly as companies are changing how they operate and are adjusting their growth plans,” she said in a report.

Telsey and her team said the period after the 2008 recession was one where companies tightened belts, worked on balance sheets and made investments in technology “in a limited way.” Now, “corporations are fully changing their business models in order to succeed in the future,” Telsey said. “We are now entering a period of higher investment spending given the more radical transformation of businesses.”

Telsey also expects an “economic tailwind” fueled by shoppers with money to spend. She said retailers have an opportunity “not to just take share, but there is increased confidence that the overall pie of consumer spending can grow.”

This will take investments, and not everyone will win. It’s an understatement to say the market is highly competitive at this point. But one channel may be innovating better than others. “What we are seeing coming out of these discussions with consumer business executives is that the department store sector seems to be ahead of the curve,” Telsey said, “with Nordstrom offering specialty store brands, like Madewell and Lorna Jane, in their full-line stores, or Macy’s now featuring Sweaty Betty in Bloomingdale’s or purchasing specialty store concepts [such as beauty retailer Bluemercury] that offer a differentiated product line or service experience in order to help enhance their full-line stores, driving both sales and traffic.”

Regarding the West Coast ports shutdown, the road to recovery is well underway, according to the monthly Global Port Tracker report issued by the National Retail Federation and Hackett Associates on Wednesday. The report noted that import cargo volume for major retail container ports will rise eight percent in April “over the same time last year as West Coast ports continue to recover from a backlog of cargo that built up before a tentative new labor agreement was signed.”

Port volumes are expected to rise in subsequent months as well, according to the report. The NRF’s vice president for supply chain and customs policy Jonathan Gold said there’s cargo still waiting to be loaded on trains and trucks, and then delivered. Gold said in the report that the “situation is getting better, but we’re still far from normal.”