BJ’s 2Q merch comps up 2.9%
NATICK, Mass. BJ’s Wholesale Club reported net income for the second quarter ended Aug. 1 of $35.1 million, or 64 cents per diluted share. For the second quarter of 2008, the company reported net income of $36.5 million, or 61 cents per diluted share. Results for the second quarter of 2008 included income of $2.0 million post-tax, or 3 cents per diluted share, related to favorable state income tax audit settlements.
Total sales for the second quarter decreased by 5.2% to $2.5 billion, and comparable-club sales decreased by 7.7%, including a negative impact from sales of gasoline of 10.6%. Excluding the impact of gasoline, merchandise comparable-club sales for the second quarter of 2009 increased by 2.9%.
For the year ending Jan. 30, 2010, the company now expects to report an increase in net sales of 0.5% to 1.5% and a decrease in comparable-club sales of 1% to 3%, including a negative impact from gasoline sales of 6% to 8%. Merchandise comparable-club sales excluding gasoline are expected to increase 4% to 6%. Previous sales guidance was for an increase in net sales of 0.6% to 2.6%, and a decrease in comparable-club sales of 2.5% to 0.5%, including a negative impact from gasoline sales of 6.5% to 8.5%. Merchandise comparable-club sales excluding gasoline were expected to increase 5% to 7%.
For the full year, the company now expects to report net income in the range of $134 to $140 million, and diluted earnings per share in the range of $2.46 to $2.56. Previous guidance was for net income in the range of $132.7 million to $138.2 million, and diluted earnings per share in the range of $2.44 to $2.54.
Office Depot gets organized
BOCA RATON, Fla. Office Depot announced a new assortment of plastic storage solutions available at Office Depot retail store locations nationwide and online at www.officedepot.com.
The new lineup features more than 200 different storage products from brands such as Really Useful Boxes, BankersBox, Snapware, Gracious Living, Vaultz, Snap-N-Store, Innovative Storage Designs and Iris.
Office Depot is showcasing these products in a new store set by grouping plastic storage according to size and usage and organizing corrugate storage by color-coded packaging.
“With hundreds of different storage solutions available at Office Depot, customers will be able to find a vast mix of colors, sizes, and styles to meet their needs,” said Steve Olsen, VP merchandising for Office Depot.
Improved profits result of operational discipline
Sales and profits at Target may have declined in the second quarter, but the company’s performance was better than expected, and the company’s shares were sharply higher Tuesday morning. Profits declined to $594 million from $634 million and earnings per share dropped 3.9%to 79 cents from 82 cents, but that figure handily exceeded analysts’ consensus estimate of 66 cents, thanks to margin improvement and expense control.
“Second quarter earnings were stronger than expected due to very strong operating margin in our retail segment, and credit card segment performance in line with expectations,” said Target chairman, president and chief executive officer Gregg Steinhafel. “Looking forward to the second half of the year, we are focused on initiatives to drive incremental traffic and sales in our stores while maintaining disciplined execution in both of our business segments.”
The company’s gross margin rate improved to 31.9% from 31.2% and its expense rate was reduced, which aided profits despite sales weakness. Retail sales decreased 2.7% in the second quarter to $14.6 billion from $15 billion, as a 6.2% decline in same-store sales was more than could be offset by the impact of the addition of new stores. Operating profits for Target’s retail segment declined 3.1% to slightly more than $1 billion.
Target’s credit business remains a concern, despite what the company called “improve portfolio performance.” Write-offs during the quarter totaled $304 million, a figure that was in line with the company’s expectations. Operating profits for the segment declined to $63 million from $74 million, and the allowance for doubtful accounts totaled slightly more than $1 billion, indicating a high degree of pessimism about the ability and willingness of credit customers to pay their bills in future periods.