Retailers hope for strong holiday sales

Wal-Mart and Home Depot raise profit forecasts for the year, even though third-quarter earnings were a mixed bag.

By Kim Peterson Nov 16, 2010 3:23PM
Shopping for deals © CorbisUpdated: 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.

Post continues after video:
"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.

6Comments
Nov 17, 2010 1:28PM
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No one makes the connection that that the world's largetst retailer also shuttered more businesses and exploits the cheap Chinese labor market to boost their wealth.  Walmart is the reason many of you have no job, but many still spend your unemployement check at WalMart.  Maybe people are starting to realize Wallyworld has been the largest erosion of our manufacturing base and the driving force behind NAFTA, which was the biggest sellout of American jobs, technology, and the basis of the top 2% accumulating 58% of the nations wealth. Sam Walton's business model destoyed Main Street under a Democratic President and a Rupublican Congress.  Put that in your pipe and smoke it. 

Nov 16, 2010 10:04PM
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You all have that right. First you need money to spend before you can buy...duhh...I hope big business, responsible for laying off workers so their share holders can have short term profits, choke on the holiday season. This middle class person isn't buying!
Nov 16, 2010 6:07PM
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Good luck to All Holiday will be bleak this year! A dollar that's not worth the paper its printed on. Wall St and our politicians greasing each others hands for $$$. While the American middle class is be destroyed right in front of our eyes! Welcome to the Winter of Despair 2010 as we all go of the Cliff we can thank- The to Big to Fail Banks and our Uncle Ben at the Federal Reserve!!
Nov 16, 2010 5:01PM
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Sad

Jobs cannot be "created" because we are now a consuming nation thanks to EVERYTHING going to China(the country that loves us so much), India, Philippians, Mexico and blah, blah, blah. The Pres keeps saying he will "create" jobs but we all are smart enough to figure that one out. The ceo's of companies better figure out no jobs, no buy their product so it is bad business for them too!!What difference does it make if they save money on production if Americans cannot buy what they produce??We all need to bombard Washington with "bring back the jobs". I am thinking about you younger people. I've retired but I care about you guys also and the future for you all does not look sparkling unless they bring back the jobs. Just call most any call center and you will be overseas trying to understand what they are saying. I always say "transfer me back to the U.S.A. The voice of the people at "Delta Airlines" brought their call centers back, I'm told, because there were so many complaints about not understanding the rep.I will continue to "light a fire" as you all must do also.       

Nov 16, 2010 3:43PM
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Who doens't want strong sales. The hard part is if you have a job it is paying what it did 10-20 years ago and nothing else has went down,  but American wages. So yea spend, spend, spend. NOT
Nov 16, 2010 4:32PM
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No jobs and no money should buy a whole lot of nothing. Merry Christmas and Happy Window Shopping. Buy some Power Ball tickets with whatever little money you might have. That's the best investment you can make. Good luck! Thumbs up

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