Retailers Send Mixed Messages on the Sector's Health
August 15 2017 - 11:15AM
Dow Jones News
By Suzanne Kapner
Retailers navigating a rocky landscape didn't see a lot of
clarity Tuesday as Dick's Sporting Goods Inc. and Coach Inc.
reported weak results while TJX Cos, and Home Depot Inc. posted
strong quarterly sales.
Dick's shares plunged 17% to $28.96 in morning trading, while
Coach fell 13% to $41.57. TJX inched up 1.7%, while Home Depot was
down 3.5%
Consumer spending has been strong, though more of the spending
is shifting to online purchases. Sales at retailers and restaurants
jumped 0.6% in July from a month earlier, the biggest increase
since December, the Commerce Department said Tuesday.
Dick's posted a 0.1% uptick in sales at stores open at least a
year, less than the 2% to 3% increase the company had expected, and
it lowered its earnings forecast for the year.
In a call with analysts, Dick's Chief Executive Edward Stack
acknowledged the challenging retail environment, calling it "highly
competitive and dynamic" but said the company would benefit from
industry consolidation as competitors falter.
Although consumers are showing signs of life, they are choosy
about where they spend. Coach's total sales fell 1.8% to $1.13
billion, short of Wall Street's expectations, though the company's
latest quarter was a week shorter than the year-earlier one. Sales
excluding recently opened or closed stores for the Coach brand rose
4% in North America.
Meanwhile, at TJX, the parent of the T.J. Maxx, Marshalls and
HomeGoods off-price chains, said total sales increased 6% to $8.36
billion in the latest quarter. Sales excluding newly opened or
closed locations rose 3%, extending a string of gains.
Shoppers continue to snap up bargains at TJX, which has become
one of the country's fastest-growing retailers by sticking with a
playbook from a vanishing era. It relies heavily on the instincts
of its merchandise buyers, many of whom have been with the company
for decades. TJX stores rapidly turn over limited quantities of
products that are all sold at bargain prices. The result is a
rarity in retail -- a constanttreasure hunt.
TJX's net income fell to $553 million in the three months to
July 29, from $562 million a year earlier. Income was dented by
about 4 cents a share of foreign currency fluctuations and lower
gross margins due to the company's inventory hedges.
Home Depot's total sales jumped 6.2% to $28.11 billion in its
second quarter, while same-store sales rose 6.3%.
The company is continuing to benefit from the recovering housing
market and cited sales growth among first-time home buyers. "We
anticipated this happening with millennials coming into an age
where they start to form families, children or pets or whatever
their family unit might look like, they're moving into homes, which
bodes very well for us," Chief Financial Officer Carol Tomé said
during a call with analysts.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
August 15, 2017 11:00 ET (15:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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