2 Big Retailers Post Strong Results

Wal-Mart Stores Inc. and J.C. Penney Co., two of the nation’s largest retailers, said Tuesday that earnings grew in the second quarter as they kept a tight grip on costs and the buoyant economy drew more shoppers into stores.

Earnings at Wal-Mart, the nation’s largest retailer, rose 13% as it opened more supercenters--huge stores that sell groceries along with its traditional merchandise. J.C. Penney’s earnings before a charge rose 24% as it cut costs.

The strong U.S. economy and rising consumer confidence helped boost sales and let retailers clear shelves of merchandise left from a slow spring without resorting to profit-draining markdowns.

“Inventories were in good shape and consumer spending picked up in June and July, giving retailers a good quarter,” said Joseph Ronning, an analyst at Brown Bros. Harriman.

Strong retail sales could continue if the economy stays on track. That would help earnings in the second half, the most critical time of year for retailers as it includes the Christmas holiday season.

Bentonville, Ark.-based Wal-Mart said its net income rose 13% to $795 million, or 35 cents a share, from $706 million, or 31 cents, a year earlier. The results matched the average estimate of analysts.

Wal-Mart’s earnings, which a little more than a year ago fell for the first time in decades, have been invigorated by an emphasis on opening more supercenters and international stores, which recently turned profitable.

Sales and profit rose at all of Wal-Mart’s retail units, including its discount store division, which operates 2,318 stores, and its Sam’s warehouse unit, which has 441 stores.

Its international unit, which operates 320 stores in Canada, Mexico, Puerto Rico, China and Indonesia, had an operating profit, contrasted with a year-earlier loss.

The most recent quarter includes a pretax charge of $50 million for closing 48 of the 61 Bud’s Discount City stores.

Shares of Wal-Mart fell $1.06 to close at $35.94 on the New York Stock Exchange.

At Plano, Texas-based J.C. Penney, profit from operations rose to $115 million, or 38 cents a fully diluted share, from $93 million, or 37 cents, a year earlier.

The results beat by a penny the average estimate of analysts.

The retailer reduced costs throughout its operations, analysts said, especially as it combined its drugstore unit with the newly acquired Eckerd chain. And more cuts are coming: Penney this week offered early retirement to 1,500 managers, which it said could save as much as $120 million a year.

Penney purchased Eckerd in December for $3.3 billion and is folding it into its Thrifty Drug business. The 2,832-store chain is the fourth-largest drugstore retailer in the country.

Penney’s shares rose $1.81 to close at $59.94 on the NYSE.

*

Framingham, Mass.-based apparel retailer TJX Cos. reported higher second-quarter profit. It said net income rose to $52.6 million, or 29 cents a share, from $33.7 million, or 19 cents, in the year-ago period. The figures are adjusted for a 2-for-1 stock split in June. The results beat the average estimate by analysts of 25 cents a share.

In the year-earlier period, profit of $2.37 million, or 1 cent a share, from the Chadwick’s of Boston catalog division that TJX sold to Brylane resulted in net income of $36 million, or 20 cents.