Target & Walmart's Earnings Are On Point With Investors
Thursday, February 19, 2004SUSIE GHARIB: Two big retailers, two bullish earnings reports. Both Wal-Mart and Target (TGT) closed their fiscal years at the end of January and both said today profits were good. Scott Gurvey reports.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: December is generally thought to be the key month for retailers, but giant Wal-Mart is singing the praises of January. The company said an excellent January helped it post double digit growth in both earnings and sales in its fiscal fourth quarter. Earnings from continuing operations rose 13 percent, to $0.63 a share. That matched Wall Street expectations. Profits increased 17 percent at Wal-Mart`s Sam`s Club division, 15 percent at its international division and 8.3 percent at its Wal-Mart stores division. The company said a new tax law in Germany reduced earnings by $0.03 a share.
BILL DREHER, RETAIL ANALYST, DEUTSCHE BANK SECURITIES: It was a superb result. They showed an increase in same store sales of about 4 1/2 percent. They showed an increase of earnings of about 18 percent, much stronger than we`ve seen over the last several quarters.
GURVEY: Deutsche Bank (DB) has an investment banking relationship and owns more than one percent of the shares of Wal-Mart. Wal-Mart today also increased its guidance for sales and profits in the current year. Target also reported fourth quarter earnings today, saying results were strong for its Target division and that its Marshall Field`s department store division showed a significant increase in profits. The Minneapolis based retailer said it made $0.91 a share, compared to $0.75 a share in the fourth quarter last year. That was more than expected. Unlike Wal-Mart, Target left its guidance unchanged.
ARAM RUBINSON, RETAIL ANALYST, BANC OF AMERICA SECURITIES: In the past, they`ve had high bars on earnings and the department store businesses that they run have always kind of chipped away a penny or two a quarter. And, you know, it`s kind of ugly to go through the year with that type of process. So I think they`re just taking a slightly more conservative stance. I think the business is as healthy at Target as it is at Wal-Mart.
GURVEY: Banc of America (BAC) has an investment banking relationship with both Wal-Mart and Target. Today`s results from Wal-Mart and Target helped push the retail sector still higher. The Standard and Poor`s Retail Index is up more than 57 percent in the last year. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.
