Big retailers post profit
But Wal-Mart, Nordstrom, Kohl’s have holiday concerns
Three major retailers – a discounter, a midpriced department store and an upscale chain – said their profits were up in the fiscal third quarter, showing significant improvement over last year’s dismal fall season.
But sales figures at Wal-Mart Stores Inc., Kohl’s Corp. and Nordstrom Inc. indicated that consumers were still not ready to spend freely, causing continued concern about the holiday season.
Although the results beat company expectations, executives at all three chains conceded that they faced a tough selling period ahead. Wal-Mart and Kohl’s offered guarded holiday outlooks that tempered the positive tone of their results.
“As we enter the fourth quarter, we will continue to focus on providing value for our customers,” said Kevin Mansell, chief executive of Kohl’s. “We expect them to continue to be conservative in their spending during this holiday season.”
Richard Jaffe, a retail analyst at Stifel, Nicolaus & Co., said retailers were right to be cautious.
“It’s still tough out there,” he said. “After last Christmas, doesn’t a little prudence regarding your outlook seem appropriate?”
Of the three chains, which reported their quarterly results Thursday, Kohl’s showed the biggest improvement over the same period last year, with profit up 20 percent to $193 million. Wal-Mart earned $3.24 billion, a 3.2 percent increase, and Nordstrom reported profit of $83 million, a 16.9 percent increase.
The strength of the crucial holiday season will depend on whether shoppers turn out in force and spend, with industry watchers hoping pent-up demand and attractive deals will spur sales.
But many consumers are saying they will be even more frugal than they were during last year’s dismal Christmas season, which was retailers’ worst in more than four decades.
Bob Raser, a television producer and director, is planning to spend half as much on the holidays this year and is making a spreadsheet to help him manage his gift expenses.
“I’m going to watch it to make sure I stick to it this year,” the Los Angeles area resident said. “I’m just so unsure of the future. You never know.”
Thursday’s earnings reports, which led all three retailers to raise their full-year profit outlooks, were the latest in a string of quarterly retail results this week.
On Wednesday, Macy’s Inc. reported a $35 million loss and forecast a holiday outlook that was weaker than Wall Street analysts had expected, sending shares tumbling.
At Wal-Mart, which has been ramping up its holiday efforts in recent weeks with aggressive price cuts in key categories, overall sales for the quarter ended Oct. 31 were $98.67 billion, a 1.1 percent increase from $97.62 billion in the third quarter last year.
But sales at U.S. stores open at least a year fell 0.4 percent in part because of deflation on several key grocery items and deep discounting. Earnings per share were 84 cents, up from 80 cents from the same period last year.
At Kohl’s, same-store sales were up 2.4 percent in the fiscal third quarter.
Total sales at the Menomonee Falls, Wis., company increased 6.5 percent to $4.1 billion. Its profit of 63 cents a share was 20 percent higher than the $160 million, or 52 cents, it posted for the same quarter last year.
Seattle-based Nordstrom reported fiscal third-quarter profit of 38 cents a share, better than the 33 cents it earned in the year-earlier period.
In an encouraging sign for upscale retailers, the chain’s sales beat expectations, posting a 3.5 percent increase to $1.87 billion from $1.8 billion a year earlier. Same-store sales fell 1.2 percent. Shares of Wal-Mart rose 27 cents to $53.24. Shares of Kohl’s rose 5 cents to $54.64. Nordstrom’s shares fell 35 cents, or 1 percent, to $34.51 during regular trading and fell as much as 5.5 percent in after-hours trading.