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Driven by strong top-line growth, Wal-Mart Stores Inc., Target Corp. and TJX Cos. reported robust third-quarter earnings Tuesday and the discounters said they were geared up for the holiday shopping season.
For Wal-Mart, however, softer same-store sales in the quarter were a disappointment.
Wal-Mart said net income for the three months ended Oct. 31 rose 11.5 percent to $2.65 billion, or 63 cents a diluted share, from $2.37 billion or 57 cents, in the same year-ago quarter. Earnings per share from continuing operations rose to 62 cents from last year’s 58 cents, beating Wall Street’s consensus estimate of 59 cents. Sales rose 12 percent to $83.54 billion from $74.6 billion, which included a 7.8 percent jump to $54.18 billion for Wal-Mart. Same-store sales for Wal-Mart rose by 1.5 percent in the quarter.
H. Lee Scott Jr., president and chief executive officer, told analysts during a conference call, “Today I can tell you that although we are pleased to report record sales and earnings for the third quarter, sales in the U.S. were softer than we had hoped.”
Scott also was upbeat about the fourth quarter, stating, “This season, no one will doubt Wal-Mart’s leadership on price and value. We are implementing our most aggressive pricing strategy ever.”
In a change in direction, Scott said this year shoppers will hear “Merry Christmas” spoken in Wal-Mart stores. “Last year, our customers told us they appreciate the word ‘holiday,’ but they would like it even more if we said ‘Christmas’ also.” He said in addition to a “Christmas-specific television ad,” the retailer will also play Christmas carols in its stores.
Scott said the retailer will open 21 units in the U.S. in time for holiday shopping, and noted that the company is pleased to see continued strength in the operations of its international segment.
Target said net income for the quarter ended Oct. 28 was $506 million, or 59 cents a share, representing a 16.3 percent rise from $435 million, or 49 cents, last year. The Wall Street consensus estimate was 55 cents a share. Revenues rose 11.2 percent to $13.57 billion from $12.21 billion, which included a 10.3 percent jump in sales to $13.16 billion and a 20.7 percent gain in credit card revenues to $414 million. Same-store sales rose 4.6 percent.
This story first appeared in the November 15, 2006 issue of WWD. Subscribe Today.
“We remain optimistic about our fourth-quarter outlook and we believe we’re on track to deliver strong full-year results. We expect the holiday season to be [intensely] competitive, and as a result we have planned our business to drive traffic and generate profitable sales,” said Robert Ulrich, chairman and ceo, during the company’s conference call.
Greg Steinhafel, president, said Target’s “Expect More, Pay Less” promise and commitment to delighting shoppers was one reason why the discounter posted strong results. He said for holiday, the discounter will feature “stylish handbags, clutch purses and gloves in both day and night designs.”
TJX said net income for the quarter ended Oct. 28 jumped 48.5 percent to $230.6 million, or 48 cents a diluted share, from $155.3 million, or 32 cents, in the same year-ago period. Sales rose 11.4 percent to $4.5 billion from $4.04 billion.
Separately, Target and Boots of Britain have signed a deal to roll out a selection of Boots’ branded products in each of the mass retailer’s 1,150 doors. A handful of Boots’ brands, namely Botanics and No. 7, are already sold in 109 Target doors and 59 CVS units in the U.S.