Retail so bad, even Wal-Mart cuts outlook 10%
January 8, 2009,
New York – After the gloomy December shopping period, even Wal-Mart couldn’t prevail against the biting economic winds.
In spite of its 1.9% comp climb (1.2% for the company as a whole, including Sam’s and the International unit), however, Wal-Mart took the step of reducing its earnings outlook fourth quarter.
“Our previous fourth quarter guidance for earnings per share from continuing operations was a range of $1.03 to $1.07, which we provided Nov. 13,” said evp and cfo Tom Schoewe.
Toting up negative impacts from “the after-tax charge for the settlement of 63 class action wage and hour lawsuits” and the fact that “fourth-quarter sales for Sam’s Club and Wal-Mart International are trending below our expectations and our expenses are higher than anticipated,” Schoewe announced the reduced profit range projection of 91 cents to 94 cents.
Meanwhile upstairs, Macy’s Inc., reporting a 4.0% comp drop for the month, cut its outlook for both the quarter and full year. Taking care to exclude consolidation costs for store closings announced both today and earlier this year, Macy’s said its EPS is now expected at 90 cents to $1.00 in Q4 (vs. earlier $1.10-$1.30) and $1.10-$1.20 for the year (vs. earlier guidance of $1.30-$1.50).
And that downgrade came with relatively sunny remarks by Macy’s chairman, president and ceo Terry Lundgren that, “The holiday shopping season ended with strong sales in the fourth and fifth weeks of December after a slow start to the month and unfavorable weather conditions in the Northeast, Midwest and Pacific Northwest.”
Lundgren added, “We are especially encouraged by our holiday season sales performance in My Macy’s pilot districts, where we have been working to tailor store assortments, service levels and the shopping environment to local customer needs and preferences. Of our top 15 best-performing geographic markets in December, 13 were My Macy’s pilot districts.”
Reporting a 4.1% comp fall in December, Target said profits were strained by markdowns, noting it had acted strenuously to reduce inventory and “gain market share.”
At Kohl’s, where comps fell just 1.4%, president and ceo Kevin Mansell virtually beamed, "December sales results were aided by last minute shoppers and strong post-Christmas business. Inventory levels, particularly seasonal clearance, are significantly below last year.” Kohl’s said it is “comfortable with the First Call consensus of 98 cents per diluted share for the fiscal fourth quarter. Its previous guidance was $0.90 - $1.05 per diluted share.”
Comps at JCPenney fell 8.1% -- better than the expected “low-double digit decrease,” the company pointed out.
Bon-Ton Stores, with a comp dropoff of 5.8%, sounded an encouraging note for home textiles. Tony Buccina, vice chairman and president - merchandising, stated: “Our best performing businesses were intimate apparel, children's, accessories and soft home.”
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