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Retailers Wal-Mart, Target and Kohl's See Profit Climb

August 13, 2004|From Associated Press

Despite slower sales gains this summer, Wal-Mart Stores Inc., Target Corp. and Kohl's Corp. offered upbeat outlooks on consumer spending Thursday as they reported higher fiscal second-quarter results.

Wal-Mart's profit increased 9% and beat Wall Street projections by a penny a share. The company also raised its earnings forecast for the year and said sales should pick up this fall. Target saw its profit almost quadruple because of a one-time gain from the sale of its Marshall Field's department stores.

Kohl's posted a 39% rise in net income in the period, beating analyst projections by a penny despite a 1% drop in same-store sales, or sales at stores open at least a year. It expected to return to sales gains in the current quarter.

The quarter for the three retailers ended July 31.

"Although I am concerned about high gasoline prices, I continue to believe that growth in employment and real income will lessen the impact," said Lee Scott, Wal-Mart's president and chief executive.

Doug Scovanner, Target's chief financial officer, said that despite some challenges, "Our momentum remains strong."

The nation's leading retailers appeared to embrace the Federal Reserve's optimism that the sector would bounce back. Providing more evidence was a Commerce Department report Thursday showing a 0.7% increase in retail sales in July after a 0.5% drop in June.

Wal-Mart, the world's largest retailer, earned $2.65 billion, or 62 cents a share, up from $2.44 billion, or 56 cents, a year earlier. Analysts surveyed by Thomson First Call had expected 61 cents.

Total sales for Wal-Mart were $70.46 billion, up from $63.23 billion last year. Wall Street had expected sales of $70.77 billion.

Shares of the Bentonville, Ark.-based retailer rose $1.02 to $52.65 on the New York Stock Exchange.

For Minneapolis-based Target, earnings almost quadrupled with a one-time gain from the sale of its Marshall Field's department stores to May Department Stores Co.

Target reported net income of $1.42 billion, or $1.54 a share, up from $358 million, or 39 cents, in the period last year. Total sales rose 10% to $10.56 billion from $9.59 billion. Analysts had expected sales of $11.95 billion.

Target's same-store sales rose 4%, but slowed from 7% in the first quarter.

The company's shares rose $1.48 to $41.90 on the NYSE.

Menomonee Falls, Wis.-based Kohl's earned $155.8 million, or 45 cents a share, up from $112.1 million, or 33 cents, in the year-ago period. Analysts had expected 44 cents. Sales totaled $2.50 billion, up 13% from $2.21 billion.

Kohl's saw its same-store sales reverse from a 1% gain in the first quarter.

Kohl's shares fell $1.38 to $43.70 on the NYSE before the company released results. They rose $1.09 in extended trading.

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