Three of the nation's largest retailers, Wal-Mart, Home Depot and J.C. Penney, shook off the slowing economy to post third-quarter gains in earnings.
Wal-Mart, the nation's largest retailer, said net income rose 8 percent to $1.48-billion, or 33 cents a share, for the three months ended Oct. 31. Total quarterly sales climbed 15.5 percent to $52.7-billion, while sales at stores open at least a year were up 6.7 percent.
President and chief executive Lee Scott said the results were "particularly encouraging given the slowing economy and the uncertainty of the last several months."
Customers "continue to spend cautiously and to show a preference for value," Scott said. "The weaker economy has attracted additional customers, making more frequent visits."
Deborah Weinswig, an analyst with Bear Sterns in New York, said Wal-Mart is taking advantage of its strength as a discounter. "In this day when people are having problems holding on to customers, they are really exceeding expectations," she said.
Scott said the company expects earnings in line with analysts' expectations for the fourth quarter, at about 48 cents per share. "We think it will be a good holiday season for Wal-Mart," he said.
In trading Tuesday on the New York Stock Exchange, Wal-Mart shares slipped 58 cents to close at $55.
The third quarter marked a turnaround for J.C. Penney, which earned $31-million, or 9 cents per share, in the three months ended Oct. 27, compared with a loss of $30-million, or 15 cents per share, a year earlier.
Chairman and chief executive Allen Questrom said the results vindicated changes Penney has made in its merchandise assortment and marketing campaigns. Profit margins rose due to stronger back-to-school and fall sales, better inventory control and a 1.5 percent cut in administrative costs, which more than offset planned higher spending on advertising, he said.
Penney has been closing unprofitable stores and remodeling others for more than a year. The retailer also received a big boost from its Eckerd drugstore chain, which reported an 8.4 percent gain in same-store sales. Pharmacy sales for the Largo chain climbed 11 percent.
"They are improving merchandising and injecting more fashion into it, with a value orientation," said Howard Hansen, portfolio manager at Lord Abbett & Co., which owns 1.8-million shares. "The department-store side of the business has some real momentum. Pharmacy sales are driving sales at Eckerd."
Questrom said the chain is well-positioned for the holiday sales season and expects to hit earnings of 30 cents to 35 cents per share. Analysts surveyed by Thomson Financial/First Call expect 33 cents.
In trading Tuesday on the NYSE, Penney shares rose 6.3 percent, or $1.50 a share, to close at $25.25.
At Home Depot, net income at the nation's largest home-improvement chain jumped nearly 20 percent to $778-million, or 33 cents per share, in the quarter ended Oct. 28. But while quarterly sales rose 15 percent to $13.28-billion, sales at stores open at least a year were flat.
"During the course of the quarter we resolved to redouble our efforts on execution," president and chief executive Robert L. Nardelli said in a conference call with analysts. "We fought through a turbulent economy."
The company said it had installed its new "service performance improvement" initiative in each of its stores. The effort aims to move tasks such as product restocking and maintenance to off-peak hours, allowing employees to spend more of an outlet's peak hours with customers.
While prices on many of its products remain volatile, especially lumber, the company has been able to squeeze its variable costs to help offset some of the volatility, chief financial officer Carol Tome said.
Shares of Home Depot surged 7 percent, or $2.88 a share, to close at $44 on the NYSE.
_ Information from the Associated Press and Bloomberg News was used in this report.