From top to bottom, retailers’ profit rises
Retailers at both ends of the market posted profit gains on Wednesday even as evidence of a widespread consumer slowdown continued to mount.
Saks Inc. and Neiman Marcus Inc. said they saw net income rise in recently concluded quarters, as did discounters Costco Wholesale Corp. and BJ Wholesale Club Inc.
Although Neiman Marcus’ profit was up 8% in its second quarter, which ended Jan. 26, it said sales at stores open a year or more fell 7.3% last month. Saks said that profit jumped almost 46% in its fourth quarter that ended Feb. 2, but that sales in February rose 3.4%, a comedown from double-digit gains much of last year.
“Sales increases in several of our previously high-growth-rate businesses, such as handbags, footwear and men’s, have slowed,” Saks Chief Executive Stephen I. Sadove said.
Retailers will post February sales results today. Analysts polled by Thomson Financial predicted that same-store sales collectively rose 1.2%, compared with a 2.6% gain in the same month last year. If they’re right, it would be the weakest February since 2003.
Stores are in a slump that is “taking a painful bite out of retailers’ profitability,” Retail Metrics said in a report. Industry analysts have slashed earnings projections for the current quarter by 10 percentage points since the start of the year, the report said.
“The consumer is being overwhelmed with all the negative economic news,” said Jharonne Martis, senior research analyst for Thomson Financial. “The slumping housing market, the deteriorating credit market. It’s just too much.”
Wholesale clubs, boosted by people trying to save money on food and other staples, have been outperforming other segments of the industry of late, while department stores have struggled and luxury retailers have begun to lose steam.
Costco said earnings rose 31% in the quarter that ended Feb. 17 -- helped by a rise in the price of gasoline, which is sold at many Costco stores -- and sales in February were up 7% as the average pump price jumped 25% from the same period last year. Without that jump, Costco’s U.S. sales would have risen 3%.
BJ Wholesale’s profit was $50.2 million in the quarter that ended Feb. 2, up from $11.9 million in the year-earlier period, when unusual income and expenses trimmed results by 40 cents a share. Same-store sales were up 5.4%.
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