Wal-Mart, Home Depot Report Profit Gains

Wal-Mart Stores and Home Depot on Tuesday reported stronger earnings in the May-July quarter, lifted by double-digit percentage gains in sales. But profit at J.C. Penney dropped nearly 20% on a surge in bad debt.

Wal-Mart’s results reflect the improvement in the retail sector during the second quarter. Consumers shopped with more enthusiasm in the spring and early summer, particularly for apparel, than in several years.

Wal-Mart reported net income of $706 million, or 31 cents per share, on sales of $25.59 billion in the quarter ended July 31. A year earlier, it earned $633 million, or 28 cents a share, on sales of $22.72 billion.

The company said its Wal-Mart division, including its Wal-Mart Supercenters, had an operating profit of $1.27 billion, up 10% from a year ago. The Sam’s division saw operating profit slip less than 1% to $203 million. The international operation had a loss of $10 million, contrasted with a profit of $17 million a year earlier.

Wal-Mart’s results were at the low end of analysts’ estimates.

At Home Depot, earnings rose 27% on stronger sales at its stores, including 15 new locations that opened in the quarter. Even without the store openings, sales at the home improvement retailer were up 9%.

Home Depot earned $270 million, or 56 cents per share, in the quarter ended July 28, compared with $213 million, or 45 cents, a year earlier.

Net income for the first half was $465 million, or 97 cents per share, up from $371 million, or 78 cents, for the first half of 1995.

The second-quarter results fell about midway in the range of analyst expectations.

J.C. Penney, which has lagged other big apparel retailers, said sales rose slightly in the quarter but that bad-debt losses increased 30%.

Penney said it earned $93 million, or 37 cents per share, in the quarter ended July 27, compared with $116 million, or 46 cents, a year ago.

The debt troubles increased the company’s interest and credit expense by $14 million to $62 million and cut pretax profit from consumer banking 87.5%, to $1 million from $8 million.

For the first half, Penney earned $235 million, or 94 cents a share, down 13.6% from $272 million, or $1.07, a year ago.

Penney’s results matched a consensus of analyst forecasts.

Meanwhile, Dillard Department Stores in Texas and the Southwest earned $39.5 million, or 35 cents per share, on sales of $1.34 billion in the three months ended Aug. 3. A year earlier, it earned $38.6 million, or 34 cents a share, on sales of $1.27 billion.

Off-price retailer TJX said it earned nearly $36.1 million, or 40 cents per share, in the quarter ended July 27, contrasted with a loss of $24.8 million, or 37 cents, a year earlier, when earnings were depressed in part by one-time charges.