Retail Earnings Solid, But Outlook Shaky (WMT, TJX, HD, ANF, SKS, LOW)

Earnings are in today from a number of retailers, not all of which are blazing, but all are better than a year ago. Wal-Mart Stores, Inc. (NYSE: WMT), Home Depot, Inc. (NYSE: HD), TJX Companies, Inc. (NYSE: TJX), Abercrombie & Fitch Co. (NYSE: ANF), and Saks Inc. (NYSE: SKS) posted numbers today.  As you would expect, the bulk of the reports look solid.  The guidance is where issues are coming into play so far.

Wal-Mart put up EPS of $0.88 for its FY2011 first quarter, better than expectations of $0.85 on revenues of $99.1 billion. Analysts had expected revenue of $98.3 billion, so the company did better on both counts.

Home Depot posted EPS of $0.45, excluding items. Revenues were up more than 4% over the year ago quarter to $16.86 billion. Analysts’ had been expecting EPS of $0.40 and revenues of $16.37 billion.

TJX reported FY2011 first quarter EPS of $0.80, up 63% from a year ago. Revenues totaled $5 billion and comparable store sales were up 9% from a year ago. Analysts were expecting EPS of $0.78 and revenues of $4.95 billion.

Abercrombie & Fitch posted an EPS loss of -$0.13, exactly equal to analysts expectations. Revenues totaled $687.8 million, higher than expectations of $681 million.

Saks reported EPS of $0.11 on revenues of $667.4 million, beating estimates of $0.05 for EPS and $663 on revenues.

Even though these five companies met or beat expectations, where they differ is on the strength of their outlooks for the remainder of the year. Wal-Mart has raised its EPS guidance for the second quarter from $0.88 to $0.93-$0.98, and the company re-affirmed its capex budget at $13-$15 billion for the year.

Home Depot also raised its full-year EPS guidance from $1.79 to $1.88, a penny more than previous analysts’ estimates. TJX boosted its second quarter guidance from $0.61 to $0.67-$0.72 and its full-year EPS guidance from $2.84 to $3.21-$3.32.

Abercrombie did not provide new guidance except to say that it plans to spend $200-$225 million on new and remodeled stores and other improvements. Saks issued a cautionary note on the rest of the year, although it expects same store sales to be stronger than originally expected and margins to increase throughout the year.

Except for Saks, which saw its improvements at the high-end of the market, the other clothing retailers and Wal-Mart were seeing strength at the discount end. Abercrombie especially benefitted from discounting.

Home Depot’s report drove another spike into yesterday’s report from Lowe’s Companies (NYSE:LOW). Lowe’s reported good numbers for the quarter, but offered a weak outlook compared with Home Depot’s stronger forecast.

Of this group, Wal-Mart and Saks’ shares are trading the best, up more than 2% in early trading. Home Depot and ANF are all down around 1%, and TJX shares are down more than 2%.

Paul Ausick