Saks Soars; Target Misses
It’s a buzzy week for retailers. While mass chains such as Target and Lowe’s say the damp spring cooled sales, Saks Fifth Avenue says its sales strengthened. And thanks to printed speculation that the high-end marketer has hired Goldman Sachs to explore a potential sale, as well as a reports that KKR, a private-equity firm, is considering an investment in Saks that would involve merging it with the privately owned Neiman Marcus, the marketer is generating plenty of Wall Street headlines as well.
Minneapolis-based Target says its first-quarter earnings came in at a disappointing $498 million, “below expectations as a result of softer-than-expected sales, particularly in apparel and other seasonal and weather-sensitive categories,” says Gregg Steinhafel, its CEO, in a release. “While we are disappointed in our first quarter performance, we remain confident in our strategy, and we continue to invest in initiatives, including Canada, our digital channels and CityTarget, that will drive Target’s long-term growth.”
In the U.S., its total sales managed a 0.5% gain to $16.5 billion, but same-store sales fell 0.6%.
Lowe’s also expressed disappointment, and the Mooresville, N.C.-based chain says the chilly spring depressed its exterior product sales. Net earnings for the quarter rose 2.5% $540 million, while sales fell 0.5% to $13.1 billion from $13.2 billion in the first quarter of 2012. Same-store sales for the period slid 0.7%. “Cooler than normal temperatures and greater precipitation resulted in a delayed spring selling season, which impacted our results in exterior categories,” says Robert A. Niblock, president and CEO, in its earnings release. “While overall performance in the month of March was particularly soft, April improved significantly and we have maintained that positive momentum through the first few weeks of May.”
For the fiscal year, Lowe’s now says it expects sales to increase 4%, with comparable sales rising 3.5%.
Meanwhile, Saks Inc. says sales were much brisker, with comparable-store sales climbing 5.9%. “Several merchandise categories showed sales strength during the first quarter, including women’s contemporary and advanced designer apparel; dresses; women’s shoes; handbags; children’s apparel; and men’s accessories, shoes, and contemporary apparel,” says Stephen I. Sadove, CEO, in its announcement.
The company, which says profits declined as a result of debt repayment and its investment in digital marketing and omnichannel efforts, says it remains confident that the investment in its Project Evolution technology initiatives is essential. Says Sadove: “These strategic long-term investments in infrastructure and technology that will enable us to further enhance our omni-channel capabilities.”