Deal-craving shoppers helped a trio of prominent U.S. retailers report Tuesday that their third quarter managed to improve this year.
From Target Corp.’s cheap chic shoppers to Saks Inc.’s luxury loving customers, there were signs consumers were willing to splurge on a few extras. Just barely.
At Target, in-store revenue rose along with foot traffic during the three-month period, but shoppers were still buying fewer items during each trip. But shoppers at both stores and discount retailer TJX Cos. surprised analysts in seeming more willing to indulge.
“We’re continuing to see improving sales trends across the board,” said Morningstar analyst Kim Picciola. “All three of them benefit from improving demand for discretionary goods.”
Of the retailers that reported Tuesday, TJMaxx’s parent company, TJX, fared best, with quarterly profit up 32 percent. It also said early holiday sales are strong.
“This presents a huge opportunity for us to capture a piece of the increased consumer spending when the economy improves,” TJX Cos. President and CEO Carol Meyrowitz told investors.
TJX’s profit was $347.8 million, or 81 cents per share. Revenue rose 10 percent to $5.24 billion
At Target, profit climbed 18 percent, helped by ongoing cost-cutting efforts along with better sales in its stores — which climbed 1.4 percent — and improvement in its credit card business.
The company earned $436 million, or 58 cents per share, during the three months that ended in late October. It earned $369 million, or 49 cents per share, a year earlier. Its revenue rose 1.1 percent to $15.28 billion
And Saks managed to post a surprise profit for the first time in 18 months as the company began selling more luxury brands starting at lower prices to capture consumers’ dollars. The company has been working with suppliers to lower prices on designer goods.
Saks earned $1.9 million, or 1 cent per share, for the period — sharply better than last year’s $43.7 million loss.
Revenue slid 8.5 percent to $631.4 million.
“I think there have been some changes in the luxury consumer,” Chief Executive Steve Sadove said on a call with analysts. “People are very much focused on value.”
That same appetite for discounts has retailers tempering their holiday forecasts as they expect promotions to get even more competitive.
Target, which has engaged in a discounting fight with Wal-Mart Stores Inc., said it expected markdowns and sales to drive business this season. While those tactics can draw big crowds, they also cut into profits.
Target executives said they planned to kick off their holiday shopping season before most American carve their turkeys, launching a one-day sale Thanksgiving Day on Target.com before the traditional Black Friday shopping sprees begin the next day. The company’s also heavily promoting its low prices.
Wal-Mart batted back Tuesday afternoon, saying it would temporarily cut prices up to 60 percent on popular toys and video games beginning Saturday and lasting through Black Friday, when a surge of shoppers usually help stores break into profitability for the full year.
The day marks the kickoff of holiday shopping for many shoppers, but its importance has faded in recent years as merchants started hawking the deep sales and expanded hours usually reserved for then well in advance.
The holiday forecast from TJX, which also owns Marshalls and HomeGoods, was conservative.
“It’s going to be fiercely competitive this holiday season,” Picciola said.
Target shares fell $1.50, or 3 percent, to $48.79 in late-afternoon trading Tuesday while TJX shares slid 76 cents, 1.9 percent, to $38.76. Saks stock climbed 28 cents, or 4.4 percent, to $6.69.
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