Retailers hope for strong holiday sales

Updated: 4:30 p.m. ET.

The retail sector got some good holiday news Tuesday as Wal-Mart Stores(WMT) and Home Depot (HD) raised profit forecasts for the full year.

Home Depot closed up 1% to $31.71; Wal-Mart ended up 0.6% to $54.26. The stocks were the only components of the Dow Jones Industrial Average ($INDU) showing gains today on a day when stocks were getting slammed. The Dow closed down 178 points, or 1.6%, to 11,024.

The news wasn't completely positive at either store, however. International business carried Wal-Mart through its third quarter, even as its U.S. stores struggled with weak traffic and sales.

The good-but-not-great theme continued at other retailers. Nordstrom (JWN) saw a massive earnings spike, but missed on revenue as sales slid at its Nordstrom's Rack discount unit. Shares fell 3% to $40.55 Urban Outfitters (URBN) beat analysts' profit forecast but missed on revenue -- yet shares closed up 11.9% to $36.63.

Wal-Mart matched analysts' profit estimates and slightly missed revenue expectations in its third quarter. Still, the company was optimistic enough to raise its profit outlook for the full year.

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"Our own surveys and the reports on the recent U.S. election cycle indicate that financial uncertainty still weighs heavily on everyday Americans, including many of our core customers," chief executive Mike Duke told investors. But he added that sales trends should improve in the holiday quarter.

Wal-Mart reported profit of $3.44 billion, or 95 cents a share, for the quarter, up from $3.14 billion, or 81 cents a share, from the year-ago period. The per-share profit (after a tax benefit was removed) was 90 cents a share -- exactly what analysts were expecting.

Revenue was $101.24 billion, just below the $102.25 billion analysts wanted to see.

U.S. stores fared worse than expected, with revenue falling 1.3% in stores open at least a year. Analysts had estimated a 0.4% drop. The company gave a broad range for fourth-quarter revenue at its U.S. stores, estimating anywhere from a 1% drop to a 2% increase, the Associated Press reported. International revenue, on the other hand, was up 9.3% in the third quarter to $26.9 billion.

But the company pleasantly surprised with its profit forecast, estimating fourth-quarter earnings at between $1.29 to $1.33 a share. Analysts were expecting $1.28 a share.
And for the full year, Wal-Mart raised its estimated profit to between $4.08 to $4.12 a share -- higher than the $4.02 analysts were looking for.

Home Depot reported a profit of $834 million, or 51 cents a share, for the quarter. That was three cents more than analysts expected.

But revenue only rose 1.4% to $16.6 billion. That's because although there were more customer transactions, the average receipt fell 42 cents to $51.47.

That put Home Depot in the unusual situation of raising its full-year profit forecast while lowering its revenue forecast. Cracking down on expenses and buying back shares helped Home Depot raise its profit forecast to $1.94 a share for the full year -- up from its prior forecast of $1.90.

But sales should only rise 2.2% from the prior year, the company said. It had previously anticipated a 2.6% sales increase.

Nordstrom reported a $119 million profit, or 53 cents a share, up from $83 million, or 38 cents a share, in the year-ago period. Revenue rose 11% to $2.18 billion. Analysts were expecting 51 cents a share in profit on $2.12 billion in revenue.

Urban Outfitters reported Monday a profit of $73 million, or 43 cents a share, for the quarter -- up from $62 million, or 36 cents a share, in the same period a year ago. Analysts were expecting 42 cents a share.

Revenue jumped 13% to $573.6 million -- lower than the $582 million analysts were looking for.