Retail Earnings... Very Mixed & Puzzling Bag (WMT, HD, SKS, TJX, SPLS, JCP, URBN, LOW)

A number of retailers reported earnings this morning, and the results might be summarized as “mixed” at best. Wal-Mart Stores Inc. (NYSE: WMT), Home Depot Inc. (NYSE: HD), Saks Inc. (NYSE: SKS), The TJX Companies Inc. (NYSE: TJX), and Staples Inc. (NASDAQ: SPLS). J.C. Penney Co. (NYSE: JCP) and Urban Outfitters, Inc. (NASDAQ: URBN) reported earnings after markets closed last night.

The world’s largest retailer managed to beat revenue expectations, but missed EPS estimates by a penny. Walmart posted revenue of $110.2 billion, up more than 8% from the same period a year ago and about 2% higher than estimates of $108.1 billion. The consensus EPS estimate called for $0.98, about 10% below EPS in the 2010 third quarter, but Walmart managed only $0.97. One bright spot for the company is that same-store sales for the quarter rose 1.3%, nearly double estimates of 0.7%.

Home Depot beat both EPS and revenue expectations, posting EPS of $0.60 on revenue of $17.3 billion. Consensus estimates called for EPS of $0.58 on revenue of $17.1 billion. The company also boosted its dividend, from an annual rate of $1/share to $1.16, up 16%. Home Depot also raised EPS guidance from $2.34 to $2.38. Home Depot’s report stands in stark contrast to competitor Lowe’s Companies Inc. (NYSE: LOW), which disappointed analysts on same-store sales and expenses related to store closures. Home Depot also reported quarterly same-store sales growth of 4.2%, far better than Lowe’s 0.7% rise.

High-end retailer Saks reported revenue for its third quarter of $692.3 million, lower than the consensus estimate of $695.1 million. EPS totaled $0.11, beating expectations of $0.09. Same store sales rose 5.8% for the quarter and 10.3% for the nine months. The company forecast same-store sales growth in the fourth quarter in the ‘mid-to-high single digit range.’ However gross margin is expected to decline by 0.5%. Gross margin in the third quarter rose by 1.6% year-over-year, and the decline is mostly due to expected promotional pricing.

TJX Companies missed on revenues, but did meet EPS estimates. The company reported this morning that EPS came in at $1.06, exactly on the consensus estimate, while revenue of $5.8 billion was below the estimate of $5.85 billion. Same-store sales were up 3% year-over-year. The company forecast full-year EPS of $3.94-$3.97, compared with the current analysts’ estimate of $3.97. The fourth-quarter EPS estimate was unchanged, at $1.19-$1.23. TJX raised its same-store sales guidance from 1%-2% to 2%-3%, but gave no guidance on gross margins, which came in at 28.1% in the third quarter.

Staples reported EPS of $0.47, as expected, but revenue of $6.6 billion failed to meet expectations of $6.7 billion. The company forecast fourth-quarter EPS of $0.39-$0.43, while analysts are expecting $0.43. Full-year adjusted EPS is forecast at $1.35-$1.39, compared with an estimate of $1.39. The full-year EPS forecast declined from a previous range of $1.39-$1.45. The company also tried to sweeten the news by boosting its full-year share buyback total from $300-$500 million to $600 million.

J.C. Penney posted an EPS loss of -$0.67 after the markets closed yesterday, but adjusted for certain items, EPS came in at $0.11, considerably better than the consensus call for an EPS loss of -$0.12. The company guided fourth quarter adjusted EPS at $1.05-$1.15, where analysts had expected $1.15. Same-store sales fell in the quarter, by -1.6%, and total sales fell year-over-year by -4.8%. The new CEO, Ron Johnson who came from Apple Inc. (NASDAQ: AAPL), started work on November 1st and promises a strategy review in time for the company’s investor meeting in January.

Urban Outfitters posted disappointing results after markets closed yesterday, even though EPS beat expectations by a penny. Same-store sales were off by -7%, and revenues of $610 million missed estimates of $614 million. Gross margins fell by nearly -6%.

A capsule review of these earnings reports points to a relatively flat fourth-quarter, with the exceptions of Home Depot and Saks. Home Depot has managed its operations better than has Lowe’s and its dividend boost is the second this year. Saks benefits from its position in the luxury retail sector, which is were the money and the growth are. For the others, the predicted 1%-2% holiday season sales boost means only that competition will be even more fierce, putting pressure on margins and profits.

Shares of Saks are up about 1.75%, at $10.38 in a 52-week range of $7.67-$12.97. Walmart shares are down about -2.3%, at $57.52, in a 52-week range of $48.31-$59.40. Home Depot is up about 1%, at $38.63, in a 52-week range of $28.13-$39.38. Urban Outfitters is down more than -3.25%, at $25.95, after posting a new 52-week low of $25.69 earlier this morning. Staples is down more than -4.25%, at $14.72, in a 52-week range of $11.94-$23.75.

Paul Ausick