With consumers keeping a firm grip on their wallets, many of the best-known names in retailing said they suffered another quarter of earnings declines and were planning new ways to lure shoppers back to their stores.
Results posted by several chains in the last week beat analysts’ low expectations, but that was largely because the stores had cut costs, not because consumers had filled up their shopping carts.
Second-quarter earnings declined year over year at Home Depot, Target, Lowe’s, Nordstrom, and Macy’s. Saks, Dillard’s, J. C. Penney and Abercrombie & Fitch posted losses. And Wal-Mart, one of the most resilient chains in this economy, reported results that were about the same as last year.
A notable exception was TJX, which owns big-box discount chains, including T. J. Maxx, and reported record second-quarter sales and earnings.
Discounters continue to fare better than their midtier competitors as consumers trade down and buy only essentials. That trend, of course, has been especially troubling for luxury retailers.
Saks, the upscale department store, said Tuesday that its year-over-year loss widened. For the three months ended Aug. 1, Saks lost $54.5 million, or 39 cents a share, compared with a loss of $32.7 million, or 24 cents a share, for the period a year ago. Sales at stores open at least a year, a measure of retail health known as same-store sales, sank 15.5 percent.
To cope, Saks cut costs, shrank its inventory and made changes to its merchandising and marketing strategies. Nowadays the chain’s emphasis is on value and exclusivity.
In an example of retailers’ new plans to get consumers shopping again, Saks is introducing a private label men’s clothing collection and expanding its Off Fifth outlet business.
“Growing Off Fifth makes even more sense in this environment as customers focus on value,” Stephen I. Sadove, the chairman and chief executive of Saks, said in a call with investors on Tuesday. “There’s less than 10 percent overlap between Saks Fifth Avenue and Off Fifth customers. So we’re essentially reaching an entirely different customer base with these stores.”
In addition to opening more Off Fifth stores, Saks plans to fill them with more merchandise made exclusively for the stores, rather than fashions from earlier seasons.
The new private label menswear collection will be in Saks Fifth Avenue stores this month. Until now, Saks’s private label program included mostly sweaters and other basics, Ronald L. Frasch, Saks’s president and chief merchandising officer, told investors on Tuesday. The chain is also working with its existing designers and brands to add new products at lower prices.
Target, the chain known for chic design at low prices, has also been tweaking its strategy, offering more grocery items to lure struggling consumers. The chain said on Tuesday that its second-quarter earnings fell 6.3 percent compared with the period a year ago, though that was better than analysts expected. For the three months ended Aug. 1, Target earned $594 million, or 79 cents a share, down from $634 million, or 82 cents, last year. Sales fell 2.7 percent, to $14.6 billion.
Jason Asaeda, a retailing analyst with Standard & Poor’s Equity Research, told investors in a research note to buy Target stock because the chain is “strengthening its business with a growing assortment of value-priced consumables.”
Home Depot, the big home-improvement retailer, reported a 7 percent earnings decline for the quarter on Tuesday, also better than analysts’ expectations. The chain has focused on offering customers new repair and maintenance items, which they have been buying instead of higher-priced discretionary goods.
“This is the second consecutive quarter of positive transactions for tickets under $50,” Craig Menear, Home Depot’s executive vice president for merchandising, told investors in a conference call.
For the three months ended Aug. 2, Home Depot earned $1.1 billion, or 66 cents a share, down from $1.2 billion, or 71 cents a share, in the same quarter a year ago. Sales for the quarter fell 9.1 percent, to $19.1 billion, compared with last year. Same-store sales declined 8.5 percent for the quarter.
Bucking the trend, TJX, which owns T. J. Maxx, Marshalls and HomeGoods stores, reported on Tuesday its best-ever second quarter earnings. For the three months ended Aug. 1, the company made a profit of $262 million, or 61 cents a share, up 27 percent from last year when the company earned 48 cents a share. Same-store sales rose 4 percent.
“Our extreme values on exciting brands and fashions continue to resonate with consumers and drive extraordinary increases in customer traffic counts,” Carol Meyrowitz, the company’s president and chief executive, said in a statement.
More than a dozen retailers plan to report their earnings results in the coming days. But analysts are not expecting many of them to repeat the performance of TJX. Ken Perkins, president of the research company Retail Metrics, expects the nation’s stores to turn in a ninth consecutive quarter of declines.
And the weak sales trends are likely to continue into the third quarter. As Mr. Sadove told investors: “I don’t see the consumer appreciably changing in terms of their behavior.”
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