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Earnings Roundup

November 18, 2009

Home Depot net income drops 8.9% as sales sink

Home Depot Inc., the largest U.S. home-improvement retailer, posted fiscal third-quarter profit that dropped 8.9% as homeowners curbed large purchases and professional contractors spent less.

Net income fell to $689 million, or 41 cents a share, in the three months ended Nov. 1 from $756 million, or 45 cents, a year earlier, the Atlanta company said Tuesday. Analysts projected profit of 36 cents a share, according to a Bloomberg survey.

Sales at older stores sank 6.9%, spurring Home Depot to reduce administrative expenses and cut inventories by $1.1 billion, or 8.9%. Purchases of $900 or more fell 10% as homeowners delayed major renovations and commercial customers lacked credit, Chief Executive Frank Blake said.

"The cost cutting can only go so far," said Robin Diedrich, an analyst at Edward Jones and Co.

Sales fell 8% to $16.4 billion as the value of the average transaction dropped 7.1% to $51.89 from $55.86 amid sinking home values and the highest U.S. unemployment rate in 26 years. The number of customer transactions slipped to 314 million from 315 million, Home Depot said.

Home Depot shares fell 66 cents, or 2.4%, to $26.99.


Shares decline on sales outlook

Shares of Target Corp., the second-largest U.S. discount chain, fell after the company said it was planning for a modest decrease in fourth-quarter comparable-store sales.

"We haven't seen that rebound or that lift yet," Chief Executive Gregg Steinhafel said.

The Minneapolis company said average transaction sizes were smaller at the start of November, although shopper visits increased.

Net income at Target advanced 18% to $436 million, or 58 cents a share, in the third quarter ended Oct. 31, from $369 million, or 49 cents, a year earlier. Analysts anticipated earnings of 50 cents a share, based on a Bloomberg survey.

Revenue increased 1.1% to $15.3 billion in the quarter. Sales at stores open at least a year, a key measure of retail health known as comparable store sales, declined 1.6%, in line with figures that Target provided Nov. 5.

Target shares fell $1.52, or 3%, to $48.77.


Discounter's profit rises 32%

TJX Cos. said its fiscal third-quarter net income rose 32% as shoppers looked for bargains at the discount retailer's chains.

The Framingham, Mass., company, which operates stores that include T.J. Maxx, Marshalls and HomeGoods, also boosted its outlook for the fourth quarter and full year.

The company said it earned $347.8 million, or 81 cents a share, in the three-month period ended Oct. 31. That compares with $235.8 million, or 58 cents, a year earlier.

Revenue climbed 10% to $5.24 billion. Analysts surveyed by Thomson Reuters expected TJX to earn 80 cents a share on revenue of $5.25 billion.

Sales at stores open at least a year, a key barometer of a retailer's health, increased 7%.

TJX expects that sales at its stores open at least a year will rise 5% to 7% in the fourth quarter and that it will earn 65 cents to 71 cents a share.

The company is forecasting profit for the year of $2.55 to $2.61 a share, based on an expectation that sales at stores open at least a year will rise 5%.

But TJX shares fell 61 cents, or 1.5%, to $38.91 as investors questioned whether the company could hold on to shoppers once the economy improves.


Luxury chain swings to profit

Luxury retail chain Saks Inc. reported an unexpected fiscal third-quarter profit, its first in more than a year, after it reduced inventories and expenses to counter a sales drop.

Net income was $1.93 million, or 1 cent a share, in the quarter ended Oct. 31, compared with a loss of $43.7 million, or 32 cents, a year earlier, New York-based Saks said.

Revenue declined 8.5% to $631.4 million. Sales at stores open at least a year fell 10%.

Revenue has dropped as consumers crimped luxury spending amid job losses and lower home values. Saks cut inventories 21% during the quarter and reduced selling, general and administrative expenses 10% to $162.6 million.

Saks shares rose 26 cents, or 4.1%, to $6.67.

-- times wire reports

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