Newspaper article THE JOURNAL RECORD

Wal-Mart, Home Depot Profits Rise; J.C. Penney Earnings Fall

Newspaper article THE JOURNAL RECORD

Wal-Mart, Home Depot Profits Rise; J.C. Penney Earnings Fall

Article excerpt

Wal-Mart and Home Depot on Tuesday reported stronger earnings in the May-July quarter, lifted by double-digit percentage sales gains. Profits at J.C. Penney dropped nearly 20 percent on a surge in bad debts.

Wal-Mart said its profit increased 11 percent on gains in its flagship chain that offset lower profits from its Sam's Club business and a loss in its international operation.

"We are pleased to return to double digit income growth and anticipate further acceleration in earnings in the second half of this fiscal year." said Wal-Mart chief executive David Glass.

The strong gain broke three straight quarters of slow earnings growth or declines for the nation's biggest retailer.

At Home Depot, earnings rose 27 percent on stronger sales that came with 15 stores that opened in the quarter. Even without the new store openings, sales were up 9 percent.

J.C. Penney said its sales rose slightly in the quarter, but that bad debts losses increased 30 percent. Bad debts also cut profits in its consumer banking operation.

Dillard Department Stores, meanwhile reported a 2.3 percent profit gain.

Wal-Mart stock was higher on the New York Stock Exchange Tuesday, while Penney, Home Depot and Dillard fell.

Wal-Mart reported net income of $706 million, or 31 cents per share, on sales of $25.59 billion in the quarter ended July 31. A year earlier the company earned $633 million, or 28 cents per share, on sales of $22.72 billion.

Wal-Mart sales grew faster than its total operating expenses in the quarter.

"Wal-Mart has focused on profitability," said David A. Poneman, retail analyst at Sanford C. Bernstein & Co. Inc. "This quarter we saw dividends from that as a reduced expense rate."

The company said its Wal-Mart division, including its Supercenters, had an operating profit of $1.27 billion, up 10 percent from a year ago. The Sam's division saw operating profit slip less than 1 percent to $203 million. The international operation had a loss of $10 million, compared to a profit of $17 million a year earlier.

For the six months since February, Wal-Mart earned $1.28 billion, or 56 cents per share, on sales of $48.36 billion. A year earlier, the company earned $1. …

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