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Ahead of the holiday season, retailers reported disappointing earnings on Tuesday, hurt by unseasonable weather and economic uncertainty.
The only bright spot came from off-price retailer Ross Stores Inc., who saw an 11 percent jump in third-quarter earnings.
Discounter Target Corp. reported a 4.5 percent drop in third-quarter earnings to $483 million, or 56 cents a diluted share, from $506 million, or 59 cents, in last year’s period. Sales rose 9 percent to $14.34 billion from $13.16 billion. Total same-store sales increased 3.7 percent.
“Our third-quarter earnings were disappointing due to softer sales in our higher-margin categories, leading to lower-than-expected gross margin in our core retail operations,” said Bob Ulrich, chairman and chief executive officer, in a statement.
Separately, the company announced a $10 billion share repurchase program, which prompted Fitch Ratings to downgrade the company on the announcement. The ratings firm cut Target’s rating to “A” from “A+” — concerned that Target will finance the repurchase program with debt.
Target’s shares took a hit, dropping 4.1 percent to close at $51.69.
Limited Brands Inc.’s earnings plummeted almost 50 percent in the third quarter. For the three months ended Nov. 3, earnings fell to $12.1 million, or 3 cents a diluted share, from $23.5 million, or 6 cents, in the year prior.
Sales dropped 9 percent to $1.92 billion from $2.11 billion and same-store sales declined 3 percent.
The company also announced an additional $250 million share repurchase program. During the quarter Limited bought back 14.6 million shares of stock for $336 million.
The women’s apparel retailer slashed fourth-quarter guidance to the range of 90 cents to $1.05 a diluted share from previous guidance of $1.18 a diluted share.
Shares of the company closed down 0.1 percent to $17.53, but rebounded 0.2 percent in after-market
Dillard’s Inc. swung to a loss in the third quarter, hurt by declining sales and gross margins.
For the three months ended Nov. 3, the company reported a loss of $11.3 million, or 15 cents a diluted share, from a profit of $13.6 million, or 17 cents, in the year-ago period. Results included a gain of $11.1 million related to hurricane recovery of a store damaged by Hurricane Rita in 2005. Sales for the quarter fell 5 percent to $1.63 billion from $1.72 billion last year, while same-store sales dropped 6 percent. Dillard’s also announced a new $200 million repurchase program. The company said it bought back $111.6 million worth of shares during the third quarter. The stock rose 5.4 percent, closing at $17.43.
This story first appeared in the November 21, 2007 issue of WWD. Subscribe Today.
Stage Stores Inc. reported a 12.5 percent drop in third-quarter earnings. For the three months ended Nov. 3, income fell to $2.4 million, or 6 cents a diluted share, from $2.8 million, or 6 cents, in the year prior. Sales rose slightly to $355.1 million from $353.3 million. Same-store sales decreased 1 percent.
“One of the consequences of the persistently warm weather was a reduction in the demand for our higher-priced fall and winter goods, which resulted in an unfavorable merchandise sales mix for the quarter,” Jim Scarborough, chairman and ceo, said in a statement.
The company said the cosmetics, plus-size and dresses categories were its strongest performers.
Stage Stores expects fourth-quarter earnings in the range of 80 cents to 85 cents a diluted share, and full-year earnings around $1.28 to $1.33 a diluted share. The stock closed up to $16.48, a 4 percent jump.
Jewelry retailer Zales Corp. widened its loss in the first quarter, hurt by warranty adjustments.
For the three months ended Oct. 31, the company posted a loss of $28.4 million, or 58 cents a diluted share, which compares with a loss of $26.4 million, or 55 cents, last year. Sales declined 1.3 percent to $377 million from $382 million, while same-store sales fell 0.4 percent.
The company expects full-year earnings in the range of 86 cents to 91 cents a diluted share. Shares fell slightly, 1 percent, closing at $19.74.
Specialty apparel retailer New York & Company Inc. reported a loss in the third quarter of $16 million, or 27 cents a diluted share, which compares with a gain of $9.6 million, or 16 cents, in the year prior.
Results include charges of $21.1 million, or 36 cents a diluted share, related to the JasmineSola chain exit.
Sales jumped 6 percent to $287 million from $270.9 million, while same-store sales fell 4.8 percent.
Richard P. Crystal, chairman and ceo, said the company has seen success in the pant, dress, skirt, jacket and sweater categories, and expects its bath and body launch to get off to a good start.
For fourth quarter, the company forecasts earnings in the range of 9 cents to 21 cents a diluted share and for the full-year expects between a loss of 10 cents to a profit of 3 cents a diluted share. New York & Co. shares plummeted 10.8 percent, closing at $6.54.