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Wal-Mart's prices hurt profit; B&N, Home Depot, Macy's earnings

February 21, 2012|By Tiffany Hsu
  • Wal-Mart's low holiday prices may have hurt its fourth-quarter profit
Wal-Mart's low holiday prices may have hurt its fourth-quarter profit (Jae C. Hong / AP Photo )

Wal-MartStores Inc.offered heavy discounts over the holiday season – a strategy that helped the world’s largest retailer perk up its revenue but also hurt its profit.

In the fourth quarter ending Jan. 31, the chain reported a 1.5% year-over-year boost in same-store sales – its second such increase after nine straight tumbles.  Executives credited lower prices, more in-store inventory and efforts including layaway programs.

Wal-Mart’s "core customers remain cautious about their finances," said Chief Executive Michael T. Duke in a conference call with investors.

"Our price leadership is making a difference across the United States, as many families are settling into a new normal," he said, promising still more discounts in 2012.

But Wal-Mart’s gross margin in the U.S. slid $100 million from last year and its consolidated net income slipped 13% (due in part to a tax benefit that pushed up income in the year-earlier quarter).

Domestic sales were up 2.4% to $72.8 billion; internationally, revenue was up 5.8% to $122.3 billion. Over the full year, sales hit $443.9 billion – a 5.9% increase. More people visited stores and spent more while there.

But executives in Bentonville, Ark., were cautious about the future, warning that "a challenging economy and rising gas prices will continue to drive customers to seek value," potentially leading customers to limit their shopping trips.

Wal-Mart’s stock fell 4% in early afternoon trading in New York to about $60.

A raft of other retailers also reported earnings on Tuesday.

At Home Depot, income spiked nearly 32% to $774 million over the fourth quarter – the ninth straight quarter of double-digit growth in profit. The chain has far outperformed its closest competitor, Lowes Cos. Inc., which in its most recent quarterly report noted a 44% slump in earnings.

Same-store sales were up 6.2% in the U.S. branches of the chain – the top home improvement company in the country. Overall revenue spiked up 6% to $16 billion as better weather inspired customers to launch outdoor building projects. 

The company’s stock was up less than a percent midday, hovering around $47 – its highest level in roughly a decade.

Macy’s Inc., the largest department store company in the U.S., also had a strong fourth quarter, with profit up nearly 12% to $745 million. Revenue was up 5.5% to $8.7 billion, with same-store sales improving 5.2% year over year.

The company, which also owns Bloomingdale’s, said it had a stellar holiday season. Online sales at macys.com and bloomingdales.com soared 40% over the quarter and nearly the same percentage over the year.

Macy’s stock was up around 1.8% to $36.92 midday, continuing an upward trend that started in late 2008.

But bookstore chain Barnes & Noble’s third quarter results were less rosy. Income fell 14% to $52 million compared with $60.6 million a year earlier as the company struggled with high costs.

The bookseller’s stock slumped 5% during trading to around $12.40.

Sales, however, were strong. Revenue increased 5% to $2.4 billion, with same-store sales rising 2.8%. Sales of physical books were up 4%.

The chain’s digital content sales ramped up 85%. And Nook e-readers, whose sales boomed 64%, were also strong performers.

On Tuesday morning, Barnes & Noble unveiled a $199 Nook, designed to compete with the same-priced Kindle Fire from Amazon.com.

RELATED:

Macy's quarterly sales, profit surge

Hurricane sales boost Home Depot's profit

Wal-Mart earnings miss Wall Street forecasts

Barnes & Noble considers selling its Nook e-reader business

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