Bargain behemoth, Wal-Mart Stores said that for the first quarter ending on April 30th, its profits were $3.02 billion, or 77 cents a share, compared with $3.02 billion, or 76 cents a share, for the period a year ago. Revenue fell 0.6 percent, to $93.47 billion, from $94.04 billion a year earlier. If not for the falling value of the dollar, which reduced the company’s profits overseas, the results would have been much higher — up 4.5 percent to more than $98.
Kohl’s profit for the three months that ended May 2nd fell to $137 million, or 45 cents a share, compared with $153 million, or 49 cents a share, a year earlier. That was better than retailing analysts had expected.
Executives at both companies were positive about their performance.
“We’re pleased to report that fiscal year 2010 is off to a very good start, even though this is the most challenging economy we’ve faced in decades,” Michael T. Duke, Wal-Mart’s president and chief executive, said in a recorded conference call. “Wal-Mart continues to outperform the market.”
While other retailers are cutting back, Kohl’s is charging ahead. The discount apparel chain has bought stores once occupied by the now bankrupt Mervyn’s chain. It is also remodeling 40 percent more of its stores than it did last year. Kohl’s executives also said the chain would be able to expand into even more locations as other chains closed stores or liquidated.
Wal-Mart has also been aggressive in its ventures to capture market share. The company’s low prices on a plethora of items have helped it take business from weaker retailers as well as supermarkets and grocery stores. For the three months ending on May 1st, sales at Wal-Mart stores open at least one year — a measure of retail health known as same-store sales — increased 3.7 percent. United States same-store sales in April rose 5.9 percent.
During a recorded conference call, Eduardo Castro-Wright, vice chairman of Wal-Mart’s United States operations, said that about 17 percent of Wal-Mart’s customer traffic came from new customers and that they spent 40 percent more on a shopping trip than Wal-Mart’s average — evidence that shoppers were trading down.
Bob Drbul, a retailing analyst with Barclays Capital, estimated that 27 percent of Wal-Mart’s sales growth in February came from new households. And Wal-Mart intends to keep them coming back.
“Many of you have asked if the success we’ve had recently is just a result of the economic downturn and will it last once the economy recovers,” Mr. Duke said in the conference call.
“As I said earlier, customers have changed their behavior and their mind-set,” he said. “They’re proud to tell people that they shop at Wal-Mart. We believe the improvements we’ve made in merchandising, marketing and operations, in the U.S. and around the world, are sustainable. This is not a short-term phenomenon.”
Wal-Mart said it expected to earn 83 to 88 cents a share in its current quarter, and that same-store sales at its United States and Sam’s Club stores would each be flat to up 3 percent.
At Kohl’s, executives said that in the next three months they expect the chain to earn 56 to 64 cents a share. Kohl’s also updated its guidance for its 2009 fiscal year. Kohl’s now expects to earn $2.19 to $2.42 a share, up from its previous guidance of $2 to $2.30 a share.
Kohl’s has been a favorite of many analysts who have praised its management team, investments in technology, and even its marketing. The company is also proving adept at hooking consumers on its exclusive name brands, which account for 44 percent of Kohl’s sales. The Mudd children’s apparel brand will become exclusive to Kohl’s in July, just in time for back-to-school shopping. And in October, a line of clothing by Lauren Conrad — the star of ” MTV’s popular reality series “The Hills"— will make its debut in Kohl’s stores.
Kohl’s earnings results exceeded analysts’ expectations. And Wal-Mart’s results were in line with expectations. Each chain is positioned to thrive when the economy rebounds, analysts said.
