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Retailers seeing a gradual rebound

LOS ANGELES — Several of the nation's largest retailers saw earnings rise significantly in the fourth quarter and said Tuesday that they expected continued improvement this year even against a slow industry recovery.

For the quarter that ended Jan. 30, department store giant Macy's swung to a $466 million profit after losing billions in the year-earlier period; discounter Target said profit rose 54 percent; and Sears Holdings posted its best quarterly profit in three years.

Also, the No. 1 U.S. home-improvement chain, Home Depot, posted a profit of $342 million, compared with a loss of $54 million a year earlier, even as sales dipped 0.3 percent to $14.6 billion.

"It's very clear, looking at the economic environment as well as the retailers' businesses, that the environment is dramatically better from where it was a year ago," said Bill Dreher, senior retail analyst at Deutsche Bank Securities who follows all three companies. Still, he said, sales results weren't as encouraging as profitability.

For example, Macy's sales in the fourth quarter declined 1.1 percent, to $7.85 billion from $7.93 billion in the year-earlier period. Sales at stores open at least a year — known as same-store sales and considered an important measure of retail health — were down 0.8 percent.

Macy's $466 million profit compared with a loss of $4.77 billion a year earlier, a result of a write-down in assets.

Target's fourth-quarter profit totaled $936 million, or $1.24 a share, compared with $609 million, or 81 cents, in the year-earlier period. The country's second-largest discounter said sales increased 3.7 percent to $19.7 billion from $19 billion; same-store sales increased 0.6 percent.

At Sears, quarterly profits more than doubled to $430 million, but sales slid $33 million to $13.2 billion for the quarter. For the year, total sales fell $2.8 billion to $44 billion. The decreases were mainly due to lower same-store sales and 62 fewer Kmart and Sears full-line stores.

U.S. same-store sales declined 2.5 percent in the fourth quarter.

"I recognize that our financial results, while substantially improved from 2008, remain well below where we would like them to be," chairman Edward S. Lampert said in a letter to shareholders posted on the company's Web site. "At the same time, we have seen significant improvements in our focus on customers and the transformation of our culture."

On Monday, Sears Holdings said it would close 21 underperforming stores this spring.

Home Depot said its improved returns were due in part to cutting $1.3 billion in costs and a drive by homeowners to do small home maintenance and decor projects.

Still, Home Depot said its professional customer — which typically has rung up about a third of its sales — continues to struggle.

Fourth-quarter net income


2009: $466 million

2008: -$4.77 billion

Sears Holdings

2009: $430 million

2008: $190 million


2009: $936 million

2008: $609 million

Home Depot

2009: $342 million

2008: -$54 million

Retailers seeing a gradual rebound 02/23/10 [Last modified: Tuesday, February 23, 2010 9:57pm]
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