NEW YORK — Major mass and teen retailers such as American Eagle Outfitters, Urban Outfitters and Target Corp. reported stellar third-quarter results Thursday, boosting their outlook for the holiday shopping season.
In high-end specialty retailing, however, Tiffany & Co. didn’t fare as well.
American Eagle said net income soared 220 percent on a 34.7 percent sales gain. Urban Outfitters delivered an earnings increase of 84.8 percent on a 52 percent sales spike, while The Children’s Place posted a 52.3 percent net income gain on sales that rose 25.6 percent.
Target, its pockets fat from the recent sale of its Mervyn’s stores, posted a 78 percent earnings increase on sales that rose 11 percent. Target said same-store sales are looking stronger than planned.
Kohl’s said consumers responded strongly to its private label launches, which include Apt. 9. Profits rose 18.6 percent on a sales increase of 14.6 percent, and the company said it was well positioned for the holidays.
For the top performers, the third quarter was a story of strong sell-throughs of fall merchandise.
The lone dark cloud was Tiffany, which reported earnings fell 25.8 percent on sales that rose 7.2 percent. Net earnings dropped to $20.8 million, or 14 cents a diluted share, from $28 million, or 19 cents, in the same period last year while sales jumped to $461.2 million from $430.1 million.
Tiffany said in a statement that profits “were below management’s expectations,” which initially called for earnings to be flat. “Retail sales growth in the U.S., including a 4 percent increase in comparable-store sales, and in many international stores was partially offset by weaker-than-expected sales in Japan and the company’s direct marketing channel,” the company said.
Still, Merrill Lynch analyst Mark Friedman was bullish on Tiffany stock. “While Tiffany appears to be struggling, we continue to believe that metrics are moving in the right direction, albeit slowly, and that patient investors will be rewarded,” he said in his note after the quarterly results. “The stock is trading near historical valuation lows at a time when the brand is improving sales of its most expensive items. In our opinion, the biggest risk factor today is not whether Tiffany turns around the earnings momentum, but when.”
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American Eagle’s surge in third-quarter earnings to $58 million, or 77 cents a share, from $18.1 million, or 25 cents, met analysts’ estimates. Profits in the previous year include a goodwill impairment charge of $8 million related to the company’s Bluenotes division. Total revenues were $503.4 million, up from $373.8 million last year, with consolidated same-store sales swelling 24.9 percent.
More full-priced selling helped gross margin in the quarter rise to 47.1 as percent of sales from 38.1 in the year-ago period.
Jim O’Donnell, chief executive officer of American Eagle, said on a conference call that the “primary keys to our success were comprehensive and consumer-appropriate merchandise assortments for back-to-school and fall seasons.”
Sales “combined with a significant reduction in merchandise markdowns, drove a 900 basis point improvement in gross margin, leading to record third-quarter earnings that were three times higher than last year,” he said.
The retailer’s design and merchandise groups “are now working in lockstep and across the entire company,” O’Donnell said.
Fourth-quarter earnings are now anticipated at $1 to $1.03, versus the consensus for 98 cents. Last week, American Eagle had said it was comfortable with analysts’ then-consensus for a profit of 92 cents in the quarter.
Meanwhile, another specialty retailer, Urban Outfitters, reported net income of $26 million, or 31 cents, beating consensus estimates by a penny. In the year-earlier quarter, Urban earned $14.1 million, or 17 cents. Total sales in the quarter climbed to $216.4 million, with consolidated comps up 18 percent.
For Secaucus, N.J.-based Children’s Place Retail Stores Inc., blooming sales pushed earnings to $17.7 million, or 65 cents a share, from $11.6 million, or 44 cents, in the year-ago period while sales advanced 25.6 percent to $280.5 million from $223.3 million.
For the nine-month period, earnings exploded 148.1 percent to $19.3 million, or 70 cents, compared with $7.8 million, or 29 cents, in the same period a year ago. Sales rose 23.4 percent to $695.4 million from $563.4 million.
At Target, a $203 million gain from the sale of Mervyn’s sent earnings for the third quarter and nine months skyward. For the three months ended Oct. 30, the Minneapolis-based retailer reported that earnings vaulted to $537 million, or 60 cents a diluted share, from $302 million, or 33 cents, in the year-ago period.
Revenues, including revenues generated by its credit card operations, rose 11 percent to $10.91 billion from $9.83 billion. Sales rose 11.2 percent to $10.62 billion from $9.55 billion.
For the nine-month period, earnings jumped 137 percent to $2.39 billion, or $2.62 a share, from $1.01 billion, or $1.10, while total revenue rose 11.6 percent to $31.65 billion from $28.35 billion. Sales increased 11.9 percent to $30.81 billion from $27.54 billion.
Shari Schwartzman Eberts, equity analyst at J.P. Morgan Securities, said in a research note that “as expected, Target blessed the current fourth-quarter consensus estimate of 94 cents as an appropriate point in time estimate; Target expects low-double-digit sales growth, with comps up 3 to 5 percent, an acceleration from November’s 2 to 4 percent plan as comparisons ease somewhat in December.”
After the market closed, Kohl’s reported third-quarter net income of $143.8 million, or 42 cents, compared with $121.2 million, or 35 cents, a year ago, while net sales jumped to $2.7 billion from $2.4 billion. Comps showed a gain of 1.2 percent.
For the nine-month period, net income rose 20 percent to $413.3 million, or $1.20 per share, from $344.3 million, or $1 per share, in the prior year as net sales increased 13.4 percent to $7.6 billion from $6.7 billion.
Larry Montgomery, chairman and ceo, said in a statement he was “pleased with the progress made on the four initiatives we have been focused on all year. We are particularly excited about the customers’ response to the new merchandise launches in the third quarter.”
For the fourth quarter, the ceo said he believes Kohl’s is “well-positioned for the holiday season in terms of content and level of inventory, our in-store shopping environment and our marketing and advertising calendar.”