TJX profit climbs 20% in 1st quarter

Retailer Wal-Mart forecast sales at stores open at least a year may be flat in the second quarter due to high gasoline prices. (Chris Hondros/Getty Images)

TJX Cos., the owner of the T.J. Maxx and Marshalls chains, said first-quarter profit rose 20 percent as consumers bought reduced-price clothes and shoes.

But TJX shares fell after second-quarter earnings forecast missed some analysts' estimates.

Net income climbed to $193.8 million, or 43 cents a share, in the three months ended April 26, TJX said. Excluding a tax benefit, earnings were 41 cents, meeting analysts' estimates.

Chief executive Carol Meyrowitz snagged deals on designer-label clothes and home goods that enabled the retailer to lure cash-strapped consumers with bigger discounts. TJX cut into its profit margin to hedge against a US slowdown and invest in faster-growing units in the United Kingdom, Germany, and Canada.

"In a slower economic environment, you see department store customers trading down to the off-price space," said Patrick McKeever, a Grosse Point, Mich., analyst at MKM Partners LP. "They tend to hold their own better than other retailers in a tough economic environment."

Sales in the first quarter rose 6.2 percent to $4.36 billion, Framingham-based TJX said. The T.K. Maxx chain in Britain and Winners and HomeSense in Canada posted the fastest revenue growth among TJX's divisions, helped by the dollar's decline. (Bloomberg)

Wal-Mart Stores Inc., the world's largest retailer and a benchmark for the US economy, posted higher first-quarter profit and said earnings may trail analysts' estimates after record gasoline prices buffeted consumers.

Sales at stores open at least a year may be unchanged in the three months through July, the retailer said.

The forecast may be further evidence that consumer demand is slowing, pushing the United States economy toward a recession. Chief executive H. Lee Scott ordered discounts as deep as 30 percent to spur demand for drugs, groceries, and flat-screen televisions, and lure customers to Wal-Mart, which accounts for almost one-tenth of spending at US retailers.

"There are still uncertainties about the rest of the year," Scott said on a recorded call. "The economy is playing a critical factor in 2008. Customers are focusing on food and daily-use items."

Net income increased 6.9 percent to $3.02 billion, or 76 cents a share, from $2.83 billion, or 68 cents, a year earlier, the Bentonville, Ark.-based company said in a statement. Profit beat estimates by 1 cent. Revenue for the three months through April 30 rose 10 percent to $95.3 billion.

Second-quarter profit may be 78 cents to 81 cents a share, Wal-Mart said. Twenty analysts surveyed by Bloomberg estimated average profit of 81 cents. (Bloomberg)

Whole Foods Market Inc. says sales surged in the second quarter but integrating its Wild Oats acquisition caused profit to drop.

The organic and natural food retailer said net income in the quarter ended April 13 fell 13 percent to $40 million, or 29 cents per share, from $46 million, or 32 cents per share last year. Whole Foods said the acquisition of smaller rival Wild Oats cost it 6 cents per share.

Revenue rose 28 percent to $1.87 billion from $1.4 billion last year.

Analysts polled by Thomson Financial predicted a profit of 30 cents per share on revenue of $1.89 billion.

Sales in stores open at least one year rose 6.7 percent.

For fiscal 2008, the company expects sales, excluding Wild Oats, to grow 15 to 20 percent. (AP)

Electronic Arts Inc., the world's largest video game maker, reported a wider fourth-quarter loss as the company spent more to develop new titles. Sales and profit excluding some costs beat analysts' estimates.

The loss of $94 million, or 30 cents a share, compared with a loss of $25 million, or 8 cents, a year earlier, the company said. Excluding costs, Electronic Arts had a profit of 9 cents, beating the average breakeven estimate of 14 analysts surveyed by Bloomberg. Sales rose 84 percent.

Chief executive John Riccitiello increased spending to develop games by 23 percent to $316 million. The company also had costs from acquisitions including the BioWare and Pandemic game studios. Sales rose on demand for "Rock Band," "Army of Two," and "Burnout Paradise." Electronic Arts shares the profit from "Rock Band," which is co-owned by Viacom Inc.

"The bulk of the earnings go to Viacom," analyst Todd Greenwald, of Signal Hill Capital Group in Baltimore, said in an interview before results were released. "Electronic Arts books 100 percent of the revenue, so it helps them on the top line, but it doesn't help on the bottom line."

Acquisitions added 800 people to the company's research and development staff, chief financial officer Eric Brown said in an interview. The company also listed acquisition-related costs of $138 million. (Bloomberg)