Big retailers report robust quarterly profits
Fiscal fourth-quarter profit soared at many of the nation’s largest retailers, although sales results were mixed.
Wal-Mart Stores Inc., Macy’s Inc. and Home Depot Inc. reported financial results on Tuesday that underscored the retailers’ improvement at cutting costs and driving robust profit gains. Profit rose 26% at Wal-Mart, 50% at Macy’s and 72% at Home Depot.
But at Wal-Mart, the world’s biggest retailer, sales at U.S. stores open at least a year — known as same-store sales — fell for the seventh quarter in a row, declining 1.8% from the same quarter a year earlier. Some of the retail giant’s problems stem from merchandising issues — two years ago, Wal-Mart reduced the number of items it sold, which led customers to shop elsewhere — and from the increasing popularity of dollar stores. The company’s core customer is also still struggling.
“We are disappointed by Wal-Mart U.S. fourth-quarter sales,” Chief Executive Mike Duke said in a statement. “Some of the pricing and merchandising issues in Wal-Mart ran deeper than we initially expected, and they require a response that will take time to see results.”
Wal-Mart’s fiscal fourth quarter ended Jan. 31.
At Macy’s, sales for the fiscal fourth quarter ended Jan. 29 rose 5.4% to $8.3 billion compared with the year-earlier quarter. Same-store sales were up 4.3% and sales at the Macy’s and Bloomingdale’s websites rose 29.1%. The department store company has benefited from a major upheaval of its merchandising system; product assortments are now tailored to local markets, which has helped improve sales.
Macy’s CEO Terry Lundgren attributed the results to a successful holiday season and said he was confident that the company was “now on a clear path” that would lead to continued growth in sales and earnings in the years ahead.
At Home Depot, the world’s largest home-improvement retailer, sales for the fiscal fourth quarter ended Jan. 30 rose 3.8% year-over-year to $15.1 billion. Same-store sales were up 4.8%. Business was helped by snowstorms around the country that led to strong sales of high-priced items such as snowblowers.
Wayne Hood, an analyst with BMO Capital Markets, said he was encouraged by improved consumer spending and expected to see modest sales growth in the coming months. But he warned that higher prices for cotton, oil and other commodities could hamper retailers.
“I think the challenge, particularly in the back half of the year, is how these guys manage higher input costs,” he said. “There’s a certain amount of bravado that they can handle the price increases, that they can do it better than the next guy, but we’ll see.”
Also on Tuesday, bookseller Barnes & Noble Inc. said sales in its fiscal third quarter ended Jan. 29 rose 7%, but profit fell 25% as it continued to invest in its online operations and Nook e-readers. Rival Borders Group Inc. filed for Chapter 11 bankruptcy protection last week.
