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Retailers post profit gains
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August 17, 1999: 5:20 p.m. ET
Dayton Hudson, J.C. Penney and Tiffany's beat 2Q estimates
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NEW YORK (CNNfn) - Two of the country's largest retail chains, Dayton Hudson and J.C. Penney Co., Tuesday recorded better-than-expected growth in fiscal second-quarter earnings.
Also, apparel retailer The Limited Inc. and home improvement superstore Home Depot posted sharp growth in profits, matching upwardly revised estimates. Jewelry seller Tiffany & Co. also recorded a strong quarter and handily surpassed analysts' predictions.
"The consumer has been out there spending pretty aggressively for some time," said Richard Church, analyst with Salomon Smith Barney. "I think a reasonable case can be made that we will see growth through the end of the year. There may be some moderation, but the consumer doesn't shift gears on a dime."
In spite of the good news, Church pointed to J.C. Penney and said "the rising tide doesn't lift all boats." Church said Penney should have included charges connected to the company's acquisition of Eckerd drugstores.
Dayton Hudson, the fourth-largest U.S. retailer in terms of revenue, posted income of $228 million, or 49 cents per diluted share, up 33 percent from the year-earlier quarter, citing the performance of its Target discount stores. Pretax profits at Target rose 27 percent.
The earnings results surpassed the First Call consensus estimate of 46 cents per share. The latest results excluded a 1-cent per share special charge for debt repurchase.
In the year-earlier second quarter, the Minneapolis-based retailer earned $172 million, or 36 cents per share.
Total revenue for the quarter increased 10 percent to $7.8 billion. Target's revenue rose 12.6 percent.
For the first half of the year, net income totaled $422 million, or 90 cents per diluted share, up from $332 million, or 70 cents per share, in the year-earlier period. Revenue climbed 11 percent to $15 billion.
Dayton Hudson (DH) shares slipped 5/8 to 60-5/8 Tuesday afternoon.
Penney beats by 6 pennies
Penney, the fifth-largest U.S. retailer, posted a profit of 40 cents per diluted share for the quarter ended July 31, up from 35 cents a year earlier and exceeding the First Call consensus forecast of 34 cents per share. The figures exclude charges for the company's 1997 acquisition of Eckerd drugstores.
On a net basis, including charges for the Eckerd acquisition, overall profit totaled $39 million, or 12 cents per diluted share, up from $27 million, or 8 cents per share, in the year-earlier period. The company recorded special charges of $73 million, or 28 cents per share, for the acquisition of the drugstore unit in the latest quarter, and related charges of $70 million, or 27 cents per share, in the year-earlier period.
The Plano, Texas-based retailer said second-quarter revenue grew 8 percent to $7.3 billion.
J.C. Penney (JCP) stock slipped ½ to 42-1/2.
Limited delivers
Columbus, Ohio-based Limited earned $131.7 million, or 26 cents per diluted share, on an operating basis for the quarter ended July 31. That was up from $74.3 million, or 13 cents per share, a year earlier.
Analysts polled by First Call raised their consensus target earlier this month to 26 cents a share from 19 cents after the company predicted stronger-than-expected results.
Sales rose 10 percent to $2.27 billion, as the company recorded growth at its Express, Lerner, Lane Bryant and Intimate Brands units. The company owns about 84 percent of Intimate Brands (IBI), the parent company of the lingerie retailing chain Victoria's Secret.
The latest results exclude special charges and are adjusted to reflect the May 1998 spin-off of Abercrombie & Fitch Co. (ANF) as if it had occurred at the beginning of 1998. Including a charge of $13.1 million, or 4 cents per diluted share, related to the upcoming spin-off of the Limited Too chain, earnings per share were 22 cents for the latest quarter.
For the first half of the year, operating income totaled $201.1 million, or 40 cents per diluted share, up from $120.3 million, or 22 cents per share, a year earlier, as sales rose 11 percent to $4.37 billion.
Shares in The Limited (LTD) climbed ¼ to 44-9/16 in early trading.
Home Depot matches
Home Depot, the biggest U.S. home-improvement chain, posted second-quarter net income of $679 million, or 44 cents per diluted share, up from $467 million, or 31 cents per share, in the year-earlier period. That matches the forecast of analysts polled by First Call, who raised their original forecast of 39 cents last week after the retailer said sales growth would propel earnings upward.
Sales for the three months totaled $10.4 billion, an increase of 28 percent.
For the first half of the year, net income totaled $1.2 billion, or 76 cents per diluted share, up from $804 million, or 53 cents per share, in the year-ago period. Sales rose 27 percent to $19.4 billion.
Home Depot (HD) stock lost 1-7/16 to 62-9/16 by early afternoon.
Tiffany glistens
Upscale jeweler Tiffany & Co. posted a 70 percent increase in fiscal second-quarter net profit, breezing past estimates. Company officials credited the gains to "exceptionally robust sales growth across all of our product categories."
The New York-based retailer earned $23 million, or 31 cents per diluted share, for the quarter ended July 31, up from $13.5 million, or 19 cents per share, in the year-earlier period. That easily surpassed the First Call consensus estimate of 24 cents per share.
Sales for the three months rose 24 percent to $307.1 million.
For the first two quarters of the year, net earnings rose 59 percent to $39.1 million, or 53 cents per diluted share, from $24.6 million, or 34 cents per share, in the year-earlier first-half. Sales increased 22 percent to $579.3 million.
Tiffany (TIF) stock rose on the news, vaulting 3-5/8 to 50-5/16 in early afternoon trading. 
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