New York — Retailers reported choppy results for the second fiscal quarter amid the weak housing market and increased consumer caution.
Staples fared better than most, announcing an 11 percent increase in sales and net income for the three months, ended Aug. 4. Total revenue reached $4.3 billion for the quarter while net income was $179 million.
Within the North American market, retail sales grew 5 percent and comp-store sales decreased 2 percent, reflecting lower sales in furniture, supplies and business machines that were partially offset by strong sales in copy and print centers, laptop computers, ink and software.
“We are pleased to deliver double-digit top- and bottom-line growth while operating in a tough retail environment in North America.” said Ron Sargent, Staples’ chairman/CEO. “We continue to execute well and invest in new growth ideas to achieve our sales and earnings goals.”
Operating income rate was 7.4 percent for Staples’ North American retail group, down 33 basis points vs. 2006, reflecting higher fixed costs due to a decrease in comp-store sales and investments in growth initiatives, offset by tight expense controls, the company said.
During the quarter Staples opened 23 new stores in the United States, seven new stores in China, five new stores in Canada, one new store in Portugal and closed one store in the United Kingdom. It now operates 1,962 stores worldwide.
Target reported net earnings for the second fiscal quarter, ended Aug. 4, of $686 million, representing a 12.6 percent increase over the year-ago period. Total revenues in the second quarter grew 9.5 percent to $14.6 billion, boosted by new store construction, Target’s credit card operation and a comp-store sales increase of 4.9 percent.
“We are pleased with our second quarter and year-to-date results,” said Bob Ulrich, Target’s chairman/CEO.
The contribution from the company’s credit card operations to second quarter earnings before taxes (EBT), net of the allocated interest expense, was $163 million, an increase of 34 percent from the same period in 2006. The gain was attributed to growth in net interest income as well as other finance charges. Also affecting the second quarter results was a drop in Target’s effective income tax rate from 38.8 percent in 2006 to 38.4 percent in 2007.
BJ’s Wholesale Club reported a 37.5 percent increase in net income to $36.3 million for the second fiscal quarter ended Aug. 4. Results included income of $2.4 million post-tax from the disposition of a lease on one of the two ProFoods Restaurant Supply locations closed by the company in January, as well as income of $3.6 million post-tax from favorable income tax audit settlements.
Net sales for the period increased 8 percent to $2.3 billion and comp-store sales grew 3.7 percent, reflecting a 0.7 percent contribution from sales of gasoline, and a detriment from lack of pharmacy sales versus last year worth approximately 0.4 percent.
Lowe’s reported net earnings of $1 billion for the second fiscal quarter ended Aug. 3, a 9 percent increase over the same period a year ago. Sales for the quarter increased 5.8 percent to $14.2 billion, while comparable store sales for declined 2.6.
“Despite the external pressures impacting our results, our continued focus on serving customers and executing our initiatives produced comparable store sales within our guidance range,” explained Robert Niblock, Lowe’s chairman/CEO. “Solid gross margin gains drove earnings that exceeded our guidance.”
Niblock continued, “Although macroeconomic factors pressure the home improvement industry, we continue to capture market share in this challenging sales environment, and we remain committed to investing in our business to drive profitability and capitalize on long-term opportunities. As evidenced by our market share gains, the experience of the tenured and talented management team at Lowe’s allows us to capitalize on the opportunities provided in the current environment.”
During the quarter, Lowe’s opened 26 new stores including two relocations, and presently operates 1,424 stores in 49 states, representing an 11.1 percent increase in retail selling space over last year. Looking ahead, the company expects to open 40 new stores this quarter, reflecting square footage growth of approximately 10 percent, and is projecting flat comp sales for the period.
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