It Takes All Kinds Of Retailers To Post A Loss

Retail collageOffering further proof that this is an equal-opportunity recession, high-end retailer Nordstrom, middle-of-the-road Macy's, discounter Target, and big-boxer Home Depot all turned in quarterly results with breathtaking declines in profits.


The good news is that Macy's and Nordstrom turned in numbers a bit better than expectations, a hint that savvy stores are holding their own despite a sharp downturn in consumer spending.

At Macy's, fourth-quarter net income plunged to $310 million--down from $750 million in the same period a year ago, but above its forecasts. Sales sank 7.7% to $7.93 billion, and declined 7% on a same-store basis. Online sales ( and combined) gained 24%.

"As the economy weakened further in the fourth quarter, Macy's, Inc. again outperformed most major competitors in same-store sales, as we did all through the year," its execs say in a release. "This speaks well of the value, quality and fashion delivered by Macy's and Bloomingdale's through the holiday season, and of the determination and strength of our organization."



The company also says it will take a writedown of up to $5.5 billion, related to its 2005 acquisition of May Co.

At Seattle-based Nordstrom, net earnings for its fiscal fourth quarter plummeted to $68 million--from $212 million in the same quarter last year--while sales fell 8.5% to $2.3 billion, slightly better than its forecast. Same-store sales fell 15.8% in the quarter, and sales at Nordstrom Direct gained 9.7%.

There were few silver linings at Target, which continues to be burned by its credit-card business. Net earnings for the Minneapolis-based chain dropped 40% to $609 million for its fourth quarter, compared to $1.03 billion in the fourth quarter last year. Sales slipped 1.6% to $19 billion, although comparable-store sales fell 5.9%.

The company has recently begun focusing on price in its advertising to compete more aggressively with Wal-Mart Stores. "In 2009, we are focused on continuing to grow our market share profitably--offering even more compelling prices on quality products in combination with a superior shopping experience," it says in its earnings release.

Target's bet on the credit card business continued to drag on results. For the full year, Target says its profit in the segment fell 80.5% to $155 million, and that the company added $440 million to its allowance for doubtful accounts. Return on investment in the segment fell from 6.3% in 2007 to 3.7% in 2008.

But the worst news came from Atlanta-based Home Depot, where the company reported a net loss of $54 million for the fourth quarter of its fiscal year compared to net earnings of $671 million in the same period a year ago. The company credits the loss to writedowns in discontinued operations, including its decision to exit the Expo business. Sales for the quarter dropped 17.3% to $14.6 billion, while comparable-store sales fell 13%. The company says a shift in marketing to emphasize lower prices helped the results.

And while U.S. government officials may be predicting an end to Big Hurt this year, The Home Depot doesn't: "We expect the home improvement market in 2009 will remain just as challenging as 2008," it says in its release--predicting a same-store sales slide in the high single digits throughout fiscal 2009.

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