Earnings roundup Walmart's U.S. slump

New York - Consumers may not be confident, but the stores that sell to them certainly seem to be.


Walmart and Home Depot, two of the nation's largest retailers and bellwethers of the U.S. economy, on Tuesday joined a string of other merchants that have raised their outlooks for the year despite a flow of bad economic news that suggests they have no reason to be optimistic. TJX Cos., Kohl's Corp., and Nordstrom Inc. have all boosted their profit outlooks in the past week.


Retailers' results are a closely watched barometer of how willing Americans are to loosen their purse strings, which is important since consumer spending accounts for 70 percent of the economy. But at a time when families are being squeezed by higher costs and high unemployment,the positive forecasts seem to fly in the face of other economic indicators.


"It's cautious optimism. Retailers want to be optimistic but they know consumers can turn on a dime," said Wall Street Strategies analyst Brian Sozzi.


Merchants do have lots to worry about. They want to avoid a repeat of the aftermath of the financial crisis in 2008 when shoppers pulled back so much that some retailers were forced to close their doors.


The retailer, based in Bentonville, Ark., reported net income of $3.8 billion, or $1.09 per share, in the three months ended July 31. That compares with $3.6 billion, or 97 cents per share, in the same period last year. Revenue, excluding Sam's Club membership fees, was up 5.5 percent to $108.6 billion. Results were buoyed by Wal-Mart's international business, which produces 26 percent of its revenue. The company's international division was up 16.2 percent.
Wal-Mart said it expects a positive trend going forward. The quarterly decline was smaller than the 1.1 percent drop it had in the first quarter and a 1.8 percent decrease for last year's fourth quarter. And after a difficult June, Wal-Mart said business improved in June and again in July.
Home Depot
ATLANTA — Home Depot Inc.'s second-quarter net income rose 14 percent as shoppers picked up lawn and garden products and made storm-related repairs during the summer, the company said Tuesday. The nation's largest home-improvement retailer also raised its earnings guidance.
Purchases over $900, which accounts for about 20 percent of Home Depot's revenue, rose 5.4 percent during the quarter. Transactions under $50 were flat.
"Our second-quarter results were driven by a rebound in our seasonal business, storm-related repairs and strength in our core categories," said CEO Frank Blake.
The results stood in contrast to smaller rival Lowe's, which a day earlier in part blamed bad weather for its flat second-quarter earnings and cut its revenue forecast.
TJX
TJX Companies Inc., parent of T.J. Maxx and other discount stores, said Tuesday that its second-quarter net income climbed 14 percent as it lured in budget-conscious shoppers. The company also raised its earnings outlook for the year, a sign that it expects the momentum to continue.