Report: Wal-Mart and Massmart may end talks
New York City — Wal-Mart Stores may give up its quest to buy a controlling stake in South Africa’s Massmart Holdings Ltd., if South Africa forces local procurement conditions on the retailers, the companies said, the Associated Press reported.
Wal-Mart’s bid to buy 51% of Massmart has been opposed by the South African government and labor unions worried about jobs and protecting local manufacturers and suppliers. During hearings before South Africa’s Competition Tribuna, some government officials have joined foreign activists in arguing the deal should be rejected unless Wal-Mart is required to take steps to protect jobs. But Wal-Mart said requiring it to buy an undetermined percentage of South African goods — to protect local manufacturing jobs — would give an unfair advantage to competitors not subject to such conditions.
“The parties may reluctantly walk away from the deal if there are conditions on local procurement,” Jeremy Gauntlett, senior counsel for the two companies, said at antitrust hearings in Pretoria on Monday, the report said.
Imposing conditions that Wal-Mart buy South African goods will contravene international trade accords and give competitors an unfair advantage, Gauntlett said.
Wal-Mart and Massmart made some concessions Monday, pledging not to lay off any Massmart employees for the next two years and to respect Massmart’s existing labor agreements for as long as the tribunal says is necessary, the Associated Press said.
J.C. Penny Q1 profit up 6.7%; raises outlook
Plano, Texas — J.C. Penney Co. reported Monday that its first-quarter net income rose 6.7% amid cost-cutting and improved sales. The department store chain also raised its full-year earnings profit guidance.
The company on Monday reported net income of $64 million for the three months ended April 30, up from $60 million in the same period last year.
Revenue edged up 0.4% to $3.94 billion, from $3.93 billion. Same-stores sales increased 3.8% fueled by its exclusive brands such as Liz Claiborne, Worthington and MNG by Mango. Overall, the strongest merchandise results were in women’s apparel and accessories and children’s apparel. Geographically, the best performance was in the southwest region of the country.
"We are successfully implementing our merchandising initiatives, with strong gains in both our men’s and women’s apparel businesses," CEO Myron E. Ullman III said in a statement. "Additionally, the steps we have taken to manage our expenses position us to increase the flow-through of sales to the bottom line."
In one of its previously announced cost-cutting moves, J.C. Penney is in the stages of winding down its catalog business. Ullman promised more cost savings, including trimming marketing expenses and streamlining sourcing operations. The company expects to save about $25 million to $30 million by 2013, with about half of that in 2012.
Bad weather washes out Lowe’s Q2 sales, earnings
The country’s second largest home center chain posted sales of $12.2 billion in its first quarter ended April 29. That’s down 1.6% as the one-two punch of bad weather and weak economy took its toll.
The company’s earnings also declined — down 5.7% to to $461 million. Comparable store sales were down 3.3%.
"We delivered earnings per share within our guidance for the quarter, despite lower than expected sales,” commented Robert A. Niblock, Lowe’s chairman and CEO. “During the quarter, we faced ongoing economic pressures, unfavorable weather conditions and tough comparisons to last year’s government stimulus programs. While we are focused on competing effectively in the current environment, we are also working diligently on our commitment to deliver better customer experiences. We are building momentum in 2011 behind our transformation from a home improvement retailer to a home improvement company.”
Looking ahead to the second quarter, Lowe’s expects sales to increase about 4%, and it expects comparable store sales to increase about 2%.
During the quarter, Lowe’s opened four stores, including one relocation, and closed one store that was damaged by a tornado. The company operates 1,751 stores in the U.S., Canada and Mexico.