More Retailers Profit From Robust Consumer Spending
Kmart Corp. and Gap Inc. on Thursday joined the growing list of retailers posting rosy profits for the latest quarter as Americans continued their long shopping spree.
Lands’ End Inc. reported a turnaround profit far above analyst expectations, but Nordstrom Inc. didn’t fare as well as others, posting a 2.4% profit increase.
Home Depot Inc., meanwhile, signaled that it expects earnings for the fiscal second quarter to hit 44 cents a share, more than the 39 cents analysts were expecting from the home improvement retailer, after surging demand for homes lifted sales even more than expected.
Discounter Kmart said its profit from continuing operations grew 44% to $134 million, or 26 cents, a penny above estimates, with a boost from high demand for its profitable private-label goods, which range from Sesame Street children’s clothing to Martha Stewart linens and home goods. Sales rose 7.9% to $8.76 billion. The company also benefited from keeping expenses in check.
San Francisco-based Gap said its earnings jumped 43% to $195.8 million, or 22 cents a share, as revenue climbed 29% to $2.45 billion.
There are signs that the strength of older Gap stores is waning, however. Sales in stores open a year or longer were up 8%, compared with a 19% rise in the year-ago quarter.
Analysts said Old Navy, which offers inexpensive clothing, backpacks and shoes for kids and adults, is leading the company as sales slow at the original Gap stores.
Gap last week reported a 2% increase in July same-store sales. Analysts said that may have been because Gap’s fashion choices didn’t excite shoppers, so it had to mark down prices to get the goods sold.
That’s not deterring Gap’s growth plans. Gap executives indicated Thursday that more than 450 new stores could be opened this year, exceeding the original goal of 400 to 450 stores.
Nordstrom net income rose to $70.8 million, or 51 cents a share, from $69.2 million, or 47 cents, a year earlier. Analysts said the upscale apparel company missed out on the strong sales gains enjoyed by competitors because it didn’t stock enough popular fashions.
Nordstrom’s sales edged down to $1.44 billion from $1.45 billion. Same-store sales fell 2.4%. The company also cited adjustments to a management reorganization for the weak results.
Catalog retailer Lands’ End posted a profit of $4.5 million, or 14 cents a share, in the fiscal second quarter, well above the 4-cent average estimate of five analysts polled by First Call Corp. Online sales more than doubled and demand rose for kids’ and corporate-logo clothes and home furnishings. Revenue rose 6.4% to $254.6 million.
At the close of trading on the New York Stock Exchange, Gap shares fell 63 cents to $37.88, Kmart rose 38 cents to $14.31, Lands’ End surged $3.81 to $46, Nordstrom rose 75 cents to $39.81, and Home Deport was up $1.63 at $59.38.
