NEW YORK – The outlook for the holiday season grew more positive Tuesday after major retailers, including Wal-Mart Stores Inc. and J.C. Penney, offered bullish comments about consumer spending as they reported solid earnings increases for the third quarter.
Wal-Mart, the world’s largest retailer, raised its full-year earnings outlook after posting a 12.7 percent increase in third-quarter profits that matched Wall Street estimates.
“I believe sales momentum will accelerate into the holidays,” said Lee Scott, Wal-Mart’s president and chief executive officer. “We should have a better Christmas than last year.”
Penney reported its profits nearly doubled in the quarter, beating Wall Street projections. Chairman and chief executive Allen Questrom said higher oil prices remain a concern, but he said the company is optimistic that the economy will keep improving.
Nordstrom Inc., helped by improvements in merchandising and cost controls, reported a 71 percent increase in third-quarter earnings, far exceeding Wall Street projections. The Seattle company also raised its earnings outlook.
Nordstrom earned $77.83 million, or 54 cents per share, in the three months ended Oct. 30. That compares with $45.47 million, or 33 cents per share in the year-ago period.
The Home Depot Inc., the nation’s largest home improvement chain, based in Atlanta, reported a nearly 15 percent increase in profits, and upgraded its earnings outlook. Meanwhile, Staples Inc., the nation’s largest office products retailer, posted a 26 percent increase in its third-quarter profit.
After splurging during the first five months of the year, consumers slowed their spending at the beginning of the summer as high gasoline prices and grocery bills and ongoing job insecurity took a toll. But a rebound in sales starting in October, the last month of most retailers’ fiscal third quarter, gives them more confidence that they will end the year with a strong finish. Oil prices, while still high, have come down, and the economy added 337,000 new jobs in October, the best showing since March and double what had been forecast.
Still, while the headwinds seem to be easing, they haven’t disappeared.
“Retailers still have to be concerned about oil, particular home heating and natural gas,” with the beginning of cold weather, said Ken Perkins, an analyst at RetailMetrics LLC, a research firm in Swampscott, Mass.
Wal-Mart earned $2.29 billion, or 54 cents a share, for the three months ended Oct. 31, up from $2.03 billion, or 46 cents a share, a year ago. Overall revenue rose to $69.26 billion, up from $63.04 billion a year earlier, aided by an 18 percent sales gain in the international division.
Analysts surveyed by Thomson First Call projected the company would earn 54 cents per share.
Wal-Mart, which is based in Bentonville, Ark., raised its earnings outlook for the full year to a range of $2.39 to $2.41 a share and predicted it will earn between 73 cents to 75 cents a share in the fourth quarter. Previously, the company had forecast annual earnings of between $2.34 and $2.38 per share. Analysts already expected earnings of 74 cents a share for the fourth quarter and $2.40 a share for the year.
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