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Sears, Penney sales limp
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September 2, 1999: 1:20 p.m. ET
Sears issues profit warning after weak August; Wal-Mart, Limited post gains
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NEW YORK (CNNfn) - Shares of Sears, Roebuck & Co. fell sharply Thursday after the company released sluggish August sales data and warned of lower profits, while another major retailer, J.C. Penney, recorded a drop in monthly sales amid slow back-to-school traffic.
Meanwhile, Wal-Mart Stores Inc. and several specialty chains including Talbots and the Limited posted healthy gains for the month. But retail stocks traded mostly lower Thursday, led by Dow industrials component Sears, which dropped 3-15/16 to 33-1/4 in early afternoon trading.
Sears (S) revised downward its third-quarter and full-year earnings projections after posting weak August sales. The company said the key industry measure of same-store sales -- or sales at stores open at least one year -- grew only a slight 0.1 percent last month for its U.S. stores.
CEO Arthur Martinez said that while the company expects sales will improve through "intensified marketing and merchandising initiatives," Sears is reducing its earnings outlook "until tangible signs of improvement materialize."
Third-quarter earnings likely will fall within the range of 63 cents to 67 cents per share, Sears said. That's down sharply from the First Call consensus estimate of 82 cents per share and lower than the 76 cents per share profits posted a year earlier. The company also said the full-year outlook for earnings per share should rise at "a low-single digit percentage rate."
The company also announced several management changes designed to boost sales. But despite these moves, Sears faces many challenges, notably increased competition from specialty retailers, said Michael Exstein, retail analyst at Credit Suisse First Boston.
"They have a new advertising program coming and they have other initiatives under way," he said. However, "they have not been able to impact sales trend up to now."
Sears said its merchandising president for full-line stores, Robert L. Mettler, has resigned. The company appointed the president of its credit division, Alan J. Lacy, to the additional post as president of home services and electronic commerce and named chief financial officer Julian C. Day executive vice president and chief operating officer responsible for finance, logistics and technology.
Penney sales droop
At J.C. Penney (JCP), the news also was disappointing as the company posted a 3.2 percent drop in same-store sales for the month. The company cited weak sales of jeans as well as the shifting of a big home furnishings sale from August last year to July this year. Shares in the company dropped 15/16 to 37-3/16 Thursday afternoon.
Meanwhile, Wal-Mart (WMT), the world's No. 1 retailer, said same-store sales rose 8.7 percent in August compared with the same month last year. The stock slipped 1/2 to 44-1/2.
Also, Costco Wholesale Corp. Inc. (COST) said August same-stores sales for warehouses open at least a year rose 13 percent over the same period a year ago. The company reiterated that it expects to post fourth-quarter and fiscal year per share earnings in line with analysts' estimates. However, investors reacted to the news by sending the stock down 1-11/16 to 72-1/8.
Dayton Hudson (DH) recorded a 4.9 percent increase. The company's Target stores division posted a 6.9 percent gain, making up for lower sales at Mervyn's, which saw a 1 percent decrease, and the company's flagship Dayton Hudson Department Stores, whose sales fell 2.2 percent. Shares fell 1-5/8 to 56-5/8.
Federated Department Stores (FD) posted a 2.9 percent sales gain and May Department Stores (MAY) registered a 3.6 percent rise. Federated stock dropped 2-11/16 to 44-11/16. May slipped 7/8 to 38-7/16.
Retailers posted a mixed bag
of results in August.
Among specialty retailers, women's and children's apparel chain Talbots (TLB) saw same-store sales surge 18.1 percent in August and its stock was rewarded with a boost of 2-11/16 to 33-11/16. CEO Arnold B. Zetcher said sales were strong in marked-down merchandise and regular-price fall clothes. Another women's clothing chain, AnnTaylor (ANN), recorded a 9 percent gain.
Also, the Limited (LTD) recorded a 12 percent jump in same-store sales at its chains, including Limited, Express and Structure. the Gap (GPS) said its sales rose 8 percent.
Same-store sales at Pacific Sunwear of California Inc. (PSUN) rose 5 percent, while Sunglass Hut (RAYS) saw a 5.5 sales increase.
Children's retailer Gymboree Corp. (GYMB) recorded a 19 percent drop in August sales, saying that it offered little marked-down merchandise for sale during the month and would face difficult comparisons with last year's results in the next few months.
Among home furnishings stores, Pier 1 Imports (PIR) posted a 4 percent gain.
-- from staff and wire reports
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Wal - Mart
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