Several of the nation's largest retailers reported big profit gains Tuesday for their first quarters, compared to a year ago, largely because of stronger-than-expected sales on leaner inventories.
Dayton Hudson, ranked fourth, said its profit jumped 15.2%, while No. 6 Federated Department Stores posted a 9.1% gain. Eighth-largest May Department Stores said its profit soared 21%, and the smaller Allied Stores said its profit surged 20.1%.
On the downside, Associated Dry Goods said its profit fell 41.9%.
The retailers, except for Associated Dry Goods, "went into this period with lean inventories and very conservative game plans and were able to generate some upside surprises," said Jeffrey Edelman, a retail analyst with Dean Witter Reynolds. "When sales exceed expectations, your markdowns are a little less and better controlled."
Dayton Hudson, based in Minneapolis, said net earnings for the three months ended May 3 totaled $38.6 million, compared to $33.5 million in the same period a year earlier. Total revenue for the quarter increased 10%.
Cincinnati-based Federated said its net earnings came to $47.3 million, compared to $43.4 million a year earlier. The figure for last year excluded an unusual gain of $6.6 million from the sale of Federated's Boston Store division. If that gain was included, Federated's net income declined 5.4%. Federated's sales for the three months rose 4.2%.
May Department Stores of St. Louis said its net income totaled $40.5 million, compared to $33.5 million last year. Revenue was up 10.9% for the three months.
New York-based Allied said its profit came to $20.68 million, compared to $17.23 million a year ago. Total revenue rose 7.5% to $946.8 million from $880.3 million.
Associated Dry Goods, also of New York, said its net earnings came to $5.45 million, down from $9.38 million a year earlier.
Sales increased 4.9% to $982 million from $936 million.
The company attributed the profit decline to lower-than-planned sales growth, primarily at its J. W. Robinson division in Southern California and its Caldor discount division.