Four retail giants, including the parent of Marshall Field’s, confirmed Tuesday that business has indeed been dismal, saying their third-quarter profits fell by as much as 52 percent.
But despite a brutal environment that has pitched several retailers into bankruptcy this fall, Wal-Mart and three other companies said their earnings rose in the quarter, with Baby Superstores, a new entrant to the Chicago market, reporting its profits more than doubled.
The generally disappointing financial results were issued as the government said that retail sales fell in October for the first time in three months, dropping a larger-than-expected 0.2 percent as clothing, furniture and department-store sales all declined.
For more salt in the wound, the Commerce Department lowered September’s sales increase to a 0.1 percent rise from the 0.3 percent gain originally reported.
Though the government figures give a broad indication of consumer spending–the report encompasses everything from building materials to cars to restaurants–the financial reports pinpoint weaknesses and strengths within the retail industry.
Dayton Hudson Corp. was one of the bigger losers during the fiscal third quarter, which ended Oct. 28. The Minneapolis-based company said its net income plunged 34 percent, to $44 million, or 53 cents a share, from $67 million, or 83 cents a share, a year earlier.
Same-store sales fell at its Mervyn’s subsidiary as well as its department store division, which includes Field’s. Same-store sales are sales at stores open at least a year. The picture would have been even poorer without its Target discount division, which posted a 17 percent sales increase.
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Total revenues for the latest three months grew 10 percent, to $5.57 billion from $5.05 billion a year earlier.
Dayton Hudson also said it will spend $1.4 billion on new stores next year, building 65 to 75 Target stores.
Net income at J.C. Penney Co. fell 12 percent, while Woolworth Corp. had an 8 percent decline in earnings.
Figures from Limited Inc. were more grim: The specialty apparel chain said operating profits in its third quarter, which also ended Oct. 28, plummeted 52 percent because of continuing lethargy in the women’s clothing business.
Toys “R” Us Inc. is in the same leaky boat. Reporting its results a day earlier, the discount toy chain said its earnings fell 56 percent because of slow sales and the lack of a big seller like last year’s Mighty Morphin Power Rangers toys.
Still, some retailers found plenty of customers. Profiting from the baby boomlet, Duncan, S.C.-based Baby Superstores Inc. said its earnings more than doubled on strong sales of its private-label products.
The chain–which sells baby apparel, toys, diapers and cribs, among other goods–opened its first local superstore last month in south suburban Lansing. Stores in Schaumburg and Burbank are planned for 1996. The company said eventually it could have more sites in Chicago than any other market.
Also on the bright side, Home Depot Inc. reported record earnings and sales for its 39th consecutive quarter, with third-quarter profits up 25 percent and sales up 23 percent, though same-store sales were up only 1.2 percent.
Kohl’s Corp., a Menomonee Falls, Wis.-based general merchandise chain, enjoyed a 15 percent rise in its third-quarter net income, with same-store sales up 5 percent.
Meanwhile, Wal-Mart Stores Inc. reported a 4 percent earnings increase, as expected, even though its growth has slowed during recent months. The nation’s largest retailer said net income rose to $612 million, or 27 cents per share, from $588 million, or 26 cents per share.
Revenues in the quarter, which ended Oct. 31, rose 12 percent, to $22.91 billion from $20.42 billion.
The string of lackluster earnings reports will resume Thursday, when Kmart Corp. issues its quarterly results. The struggling retailer said last month that its earnings will be far lower than year-earlier net income of 8 cents a share. On average, industry analysts are expecting a loss of 11 cents per share.
Kmart is also expected to announce on Thursday the sale of its Canadian unit.
The retail industry’s fourth quarter, which rises and falls with the Christmas season, may be no better.
“Consumer spending will be weak and Christmas sales are likely to disappoint retailers,” said senior economist Cheryl Katz of Merrill Lynch & Co. in New York.