As Retailers Report, Sales Growth in Focus

While 94 percent of the companies in the Standard & Poor's 500 Index have already reported quarterly earnings, this week remains a key week for the retail industry with 24 retailers reporting earnings—12 of which are S&P 500 components.

So far, retail earnings have been mixed. According to Thomson Reuters, S&P Consumer Discretionary blended earnings growth is up 10.8 percent, which is the third strongest sector behind financials, which had a 18.3 percent gain, and telecom, which rose 15.6 percent.

But same-store sales is the key metric for retailers as it measures sales changes for stores in place for at least a year. For the first quarter, aggregate same-store sales are estimated to post anemic growth of 0.7 percent. The barely positive growth is considerably lower than last year's 3.4 percent first-quarter gain.

Wednesday will be a big day from retailers focusing on various specialties within the sector. Before the bell, big-box discounter Target, home improvement retailer Lowe's, specialty apparel retailer American Eagle, and office supply retailer Staples report quarterly results. After the bell, pet-care retailer PetSmart, and specialty apparel retailer L Brands (formerly Limited Brands) report.

Lowe's larger rival Home Depot reported stronger-than-expected results on every metric Tuesday beating Wall Street's estimates on earnings, revenue and same-store sales. Although weather was less favorable in the quarter compared to last year, the improving housing market, and to some extent, rebuilding from Super Storm Sandy contributed to Home Depot's strong quarter, upping the bar for Lowe's to deliver when its results are released on Wednesday.

(Read More: Home Depot Reaps Housing Recovery's Effects)

Wall Street expects the second largest home improvement retailer to report earnings of 51 cents a share on $13.45 billion in revenue, with a same-store sales gain of 2 percent, which is weaker than Home Depot's 4.3 percent comp.

Last quarter, Lowe's reported a positive earnings surprise of 13 percent. Of the 26 analysts covering Lowe's, 11 received a "hold" rating on their shares from analysts, 13 have a "buy" or "strong buy," two rate shares "underperform" or "sell." The median analyst price target is $43.50, compared with its current price of about $42.53.

Wal-Mart reported its results last week; Wednesday will be Target's turn. Wal-Mart's results disappointed on a number of levels including the key same-store sales metric.

(Read More: Weak US Sales Weigh on Wal-Mart Earnings)

While Target has posted revenue growth for three straight quarters, some investors are concerned that the same sales weakness seen in Wal-Mart's results could also be reflected when Target releases its fiscal first-quarter results Wednesday.

Over the past three months, Target shares have gained 12.5 percent, and are trading higher ahead of its earnings release. Wall Street is expecting earnings per share of 85 cents per share on revenue of $13.45 billion with same-store sales growth of 2 percent.

Retailer Earnings Estimates

Same Store
Lowe's (LOW) $0.51 $13.45B 2.0%
Target (TGT $0.85 16.79B 0.1%
Staples (SPLS) $0.27 %5.91B -1.5%
American Eagle (AEO) $0.17 $677.9M -5.5%
L Brands (LTD) $0.46 $2.26B 3.1%
PetSmart (PETM) $0.96 $1.72B Not Available
Source: Thomson Reuters

-By CNBC's Courtney Reagan. Follow her on Twitter @CourtReagan

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