July same-store sales up 2.6 percent at major chain stores
Retailers posted an industry-wide comparable-store sales gain of 2.6 percent for the month of July, according to the International Council of Shopping Centers’ (ICSC) tally of 60 leading retailers.
Luxury stores outperformed other retail sectors during the month, growing their comparable-store sales 10.3 percent. Furniture chains reported the steepest decline, at 8.6 percent.
“As we have noted earlier this year, a consumer ‘soft patch’ began in February 2007, and the latest data suggested it continued through July,” said Michael Niemira, ICSC’s chief economist and director of research. “The housing market drag continues to dampen consumer demand and with it the overall economy.”
July sales figures are as follows:
Bentonville, Ark.-based Wal-Mart reported comparable-store sales rose 1.9 percent. Net sales rose 8.8 percent to $27.58 billion.
Minneapolis-based Target reported comparable-store sales were up 6.1 percent. Net sales rose 10.8 percent to $4.9 billion, the company reported.
Issaquah, Wash.-based Costco reported comparable-store sales rose 7 percent, while net sales were up 11 percent to $5.02 billion.
Home Depot earnings down in Q2, but still strong
Home Depot reported second-quarter financial results, showing net earnings fell 15 percent to $1.59 billion from $1.86 billion a year ago. Sales fell slightly, down 1.8 percent to $22.2 billion from $22.6 billion last year.
CEO Frank Blake said the company performed in line with financial expectations, despite a challenging housing market and competitive selling environment. In a statement, Blake expressed some pessimism on selling conditions in the coming year, but added the company is attempting to find valuable investment opportunities to drive growth in a down market.
“We believe the housing and home improvement markets will remain soft into 2008. We will continue to invest thoughtfully for the long-term health of the business,” Blake said.
Earnings in the company’s HD Supply unit, which the company has agreed to sell to a group of private investors, were lower in light of a hefty tax charge. Earnings fell 59 percent to $66 million from $161 million last year at HD Supply, including a tax charge of $60 million related to the disposition of the division. Home Depot now is listing HD Supply as a discontinued operation.
The company announced last week it is renegotiating the sale of HD Supply to investor groups Bain Capital Partners, Carlyle Group and Clayton, Dubilier and Rice. The negotiations could result in a lower sale figure than the earlier agreed-upon $10.3 billion. The company also modified its plan to buy back 250 million shares for between $39 and $44, amending the figure to between $37 and $42 per share in light of current financial market conditions.
“The company is in discussions with respect to the restructuring of the sale of HD Supply and is carefully watching today’s turbulent financial markets,” said a statement from Home Depot. “The company will continue to assess financial market conditions and the impact of any restructured HD Supply transaction, or failure to complete that transaction, on its overall recapitalization plan and on the terms of the tender offer part of that plan.”
At the end of the second quarter, Home Depot operated about 2,200 retail stores, including 1,923 in the United States, 157 stores in Canada, 63 stores in Mexico and 12 stores in China.
Valspar sales, earnings up in third quarter
Valspar, the paint and coatings maker with an exclusive line of products in Lowe’s stores, saw net income grow to $58.2 million, up 10.6 percent from $52.6 million in the same period last year.
Sales grew 12.1 percent to $893.5 million from $797.4 million last year.
“This was a solid quarter for Valspar with broad-based contributions from across our product lines,” said William Mansfield, Valspar president and CEO. “Results were driven by strong sales growth from acquisitions, improved operational efficiency, good performance from our architectural team in a challenging market and improvement in our wood business.”
Mansfield said that in the third quarter the company did begin to see weakness in the housing sector spill over into related coatings markets. But he added a long-term, global growth strategy should continue to drive sales growth.
Minneapolis-based Valspar’s brands include Laura Ashley Home Colour Collection, Plasti-Kote coatings, Goof Off and Cabot Stains.