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Target, BJ's post strong 4Q
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February 29, 2000: 9:24 a.m. ET
Retailers top analysts' forecasts; OfficeMax earnings below prior year
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NEW YORK (CNNfn) - Retailers Target Corp. and BJ's Wholesale Club Inc. reported better-than-expected improvement Tuesday in earnings for the period including the holiday shopping season -- but a third, OfficeMax Inc., saw its earnings drop in line with forecasts.
Results for the retailers' fiscal fourth quarter, which ended in January, basically continue the sector's trend of very strong earnings driven by rising consumer spending, a primary driver of the nation's economy.
Target's growth comes from core stores
Target Corp., the nation's fourth-largest retailer that was formerly known as Dayton Hudson Corp., recorded strong sales at its core Target stores, overcoming a decline in earnings in other divisions.
Minneapolis-based Target posted earnings before special charges of $522 million, or $1.12 a diluted share, for the quarter ended Jan. 29. Analysts surveyed by earnings tracker First Call had forecast $1.10 a share. The company earned $453 million, or 97 cents a diluted share, in the year-earlier period.
Including special charges such as early repayment of debt, net income for the period came to $494 million, or $1.06 a diluted share, up from $423 million, or 90 cents a share, a year earlier.
Sales for the quarter increased 8.7 percent to $10.9 billion from $10.1 billion a year ago. Sales rose 12.8 percent at its Target stores division to $8.6 billion, but declined 5.2 percent at its Mervyn's chain to $1.3 billion, and slipped 1.2 percent at its department stores division to $935 million.
Same-store sales in the quarter rose 3.5 percent for the company, driven by a 5.6 percent gain at Target stores.
For the year, net income rose 22 percent to $1.1 billion, or $2.45 a diluted share, from $935 million, or $1.98 a share, in fiscal 1999. Revenue rose 10 percent to $33.2 billion from $30.2 billion, topping J.C. Penney Co. and putting Target into fourth place on the rank of major retailers.
Shares of Target (TGT: Research, Estimates) gained 1-3/16 to 60-1/16 in trading early Tuesday.
BJ's helped by sales growth, new stores
Strong gains in same-club sales along with a 13 percent addition in the number of stores drove the improved results for Natick, Mass.-based BJ's Wholesale Club.
The membership-based retailer posted net income in the quarter of $47.7 million, or 63 cents a diluted share, one cent better than the forecast of analysts surveyed by First Call. In the year-earlier period, the company made $37.7 million, or 50 cents a share.
Sales rose 21 percent to $1.5 billion from $1 billion a year earlier, as same-store sales increased 9.9 percent in the quarter.
For the fiscal year, the company's net income increased to $111.1 million, or $1.47 a diluted share, compared with $62.5 million, or 82 cents a share, in fiscal 1999, when it had an after-tax charge of $19.3 million, or 25 cents a share, for a change in accounting practices.
Revenue for the fiscal year rose to $4.1 billion from $3.5 billion in fiscal 1999.
Shares of BJ's Club (BJ: Research, Estimates) gained 1-1/4 to 29-7/8 in trading early Tuesday.
OfficeMax profits drop
Office products retailer OfficeMax was hurt by a drop in sales in its core stores, as well as an increased loss from greater activity in its e-commerce division and a loss in the computer business segment.
On a consolidated basis before an inventory markdown charge, the Cleveland-based company made 17 cents a diluted share in the period, in line with expectations of analysts surveyed by First Call, down from 36 cents a share a year earlier. But the company didn't release the amount of money it made before the charges in the latest and year-earlier periods.
Total net income including the charges was $23.1 million, or 20 cents a share, compared with a net loss of $6.7 million, or 6 cents a share, a year earlier.
Sales in the quarter rose to $1.4 billion from $1.2 billion a year earlier. Same-store sales at its core stores division were basically flat, due to lower prices on some products and fewer promotions. Sales at Officemax.com rose almost 500 percent to $19.9 million from $3.3 million a year earlier, but the company posted a net loss from its online operation of $622,000, compared with $5,000 net income a year earlier.
For the fiscal year, net income including all special charges came to $10 billion, or 9 cents a diluted share, compared with $48.6 million, or 39 cents a diluted share, for fiscal 1999. Total revenue climbed to $4.8 billion from $4.3 billion a year earlier.
Shares of OfficeMax (OMX: Research, Estimates) gained 9/16 to 7-1/16 in trading early Tuesday.
Other major retailers such as Wal-Mart Stores Inc. (WMT: Research, Estimates), Home Depot Inc. (HD: Research, Estimates), Federated Department Stores (FD: Research, Estimates) and Gap Inc. (GPS: Research, Estimates) all posted better-than-expected gains in the period.
Among major retailers, only J.C. Penney Co. has missed forecasts when its earnings fell. 
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