Earnings down across a wide swath of retailers
Some of the biggest and most disparate names in American retailing — Macy’s, Home Depot, Target — reported steep profit declines on Tuesday, highlighting the breadth of the pain being felt by the nation’s chains.
"We anticipated a difficult quarter and year, and they were all that and more," Home Depot’s chief executive, Frank Blake, said in a conference call with investors.
Weak sales and deep discounts during the holiday shopping season pushed profit down nearly 59 percent at Macy’s and 41 percent at Target for the most-recent reporting period compared with the period a year ago. Home Depot, the world’s largest home improvement retailer, reported a loss.
Retailers said they expected 2009 to be another difficult year, with consumers still sitting on their wallets. The Conference Board on Tuesday said its consumer confidence index plummeted more than 12 points in February to 25, well below the 35.5 reading economists expected.
Retailers emphasized in conference calls with investors on Tuesday that they were doing everything they could to mitigate the economic pain.
"While 2008 results reflect the worst economic environment of our generation, we have taken aggressive action to drive sales, maintain profitability and conserve cash," Macy’s president and chief executive, Terry J. Lundgren, said.
Home Depot also has been conserving cash and cutting costs but said it continued to be hurt by the depressed housing market, rising unemployment and tight credit markets for consumers and businesses alike low interest rate personal loans.
For the three months ended Feb. 1, Home Depot had a loss of $54 million, or 3 cents a share, compared with $671 million, or 40 cents a share, for the same period in fiscal 2007. The results included charges related to job cuts and store closures
Sales at stores open at least a year, an important measure of retail health known as same-store sales, fell 13 percent. (A calendar shift last year hurt that number by about 1.5 percentage points.)
Macy’s also has been shuttering stores and consolidating its regional divisions. Those actions included one-time charges that caused quarterly earnings to fall to $310 million, or 73 cents a share, compared with $750 million, or $1.73 a share, a year ago. Same-store sales for the period ending Jan. 31 fell 7 percent.
The results do not, however, include charges related to the company’s 2005 acquisition of St. Louis-based May Department Stores.
Macy’s is still determining what exactly that charge will be but estimated that it would write down $4.5 billion to $5.5 billion, or $10 to $12.50 a share.
Though Target reported a profit of $609 million, or 81 cents a share, for the three months ended Jan. 31, it still fell well below the profit of $1.03 billion, or $1.23 a share, reported for the period a year ago as same-store sales fell 5.9 percent.
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