Dim Outlook at Wal-Mart and Home Depot on Home Services

Dec

Dim Outlook at Wal-Mart and Home Depot

posted by admin in Home Depot

Wal-Mart Stores and Home Depot posted quarterly results yesterday that presented a troubled outlook for retailers.

Home Depot said its quarterly earnings fell 29.5 percent, and Wal-Mart warned that profit in its current quarter might fall short of expectations.

Wal-Mart, the largest retailer in the nation, said it earned $2.83 billion, or 68 cents a share, up 8 percent from the $2.62 billion, or 64 cents a share, it earned a year earlier. Revenue in the period, which ended April 30 and was the first quarter of Wal-Martï¿½s fiscal year, rose to $86.41 billion from $79.67 billion a year earlier.

The results met the 68 cents a share profit and $86.9 billion in sales expected by Wall Street analysts surveyed by Thomson Financial.

But the company said it expected a second-quarter profit of 75 cents to 79 cents a share, while analysts were expecting a profit of 79 cents a share.

Shares of Wal-Mart, which is based in Bentonville, Ark., fell 22 cents, to $47.62 a share.

Home Depot, meanwhile, said erratic weather and continued weakness in the housing market hurt its results in the first quarter and gave a bleak assessment of its financial picture for the rest of the year.

The company, which is based in Atlanta, said it earned $1.05 billion, or 53 cents a share, compared with a profit of $1.48 billion, or 70 cents a share, a year earlier.

Revenue in the period, which ended April 29, rose 0.6 percent, to $21.59 billion from $21.46 billion.

Profit fell short of the 59 cents expected by analysts, and shares in Home Depot fell 71 cents, to $38.30.

ï¿½While we expected a tough quarter, this was worse than we expected,ï¿½ the chief executive, Frank Blake, said during a conference call with analysts.

He said the housing market remained a challenge and that erratic weather across the United States had hurt the companyï¿½s spring selling season.

Sales at stores open at least a year were disappointing for both companies.

At Home Depot, same-store sales fell 7.6 percent, and Mr. Blake said the company was not expecting any near-term market improvement.

The company said it now expected profit in the current year to decline by as much as 9 percent, the high end of the range it forecast at the start of the year.

Goldman Sachs said in a research note that the lower forecast from Home Depotï¿½s and Wal-Martï¿½s focus on lower prices ï¿½could weigh on retail stocks at large as investors become increasingly skeptical about the macro and competitive environment.ï¿½

Wal-Martï¿½s chief executive, H. Lee Scott Jr., focused on low prices during a conference call with analysts. ï¿½You will see us be more committed than ever to price leadership,ï¿½ Mr. Scott said.

Same-store sales at Wal-Mart stores in the United States rose 0.6 percent in the first quarter, with its Samï¿½s Club stores accounting for all of the gain. Wal-Martï¿½s namesake stores slipped 0.1 percent in the quarter, while Samï¿½s Club warehouse stores rose 4.7 percent.

For the current quarter, Wal-Mart projected same-store sales to rise by 1 percent to 2 percent.

Wal-Mart is losing market share after an effort last year to offer fashionable, costlier apparel, which failed to win broad customer appeal. Wal-Mart began to shift to lower-priced goods last holiday season.

Robert F. Buchanan, a retail analyst with A.G. Edwards, said apparel remained a problem for Wal-Mart. ï¿½Wal-Mart is continuing to fail to properly interpret the fashion trends of their core low-income customers,ï¿½ Mr. Buchanan said.

Samï¿½s Club, however, now has had seven consecutive quarters in which profits grew faster than sales, Mr. Scott said. Wal-Martï¿½s international division, the fastest growing part of the company, accounted for 23 percent of sales for the quarter.

Icahn Sells Federated Shares

The billionaire investor Carl C. Icahn sold his 1.3 percent stake in Federated Department Stores.

Icahn Management sold its 6.8 million shares as of March 31, Mr. Icahn said in a regulatory filing yesterday. Federatedï¿½s shares fell 96 cents, to $39.94. Funds managed by Mr. Icahn also cut their Time Warner holdings to 12.9 million shares from 25 million at the end of December, according to the filings. Mr. Icahn bought a $122 million stake in the CSX Corporation.

Mr. Icahn did not return a phone call seeking comment.