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Chains post mixed results
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May 22, 2001: 10:17 a.m. ET
Staples, Talbots meet 1Q estimates, B.J.'s Wholesale exceeds forecasts
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NEW YORK (CNNfn) - Staples Inc. and Talbots Inc. both reported first-quarter earnings in line with Wall Street expectations Monday, as Staples warned of a weak second quarter and Talbots saw sales jump 10 percent.
Meanwhile, B.J.'s Wholesale Club beat first quarter expectations on higher sales in the quarter.
Results from the three Massachusetts-based chains come as discount retailer Target Corp. (TGT: up $1.29 to $39.04, Research, Estimates) reported higher first-quarter profit that fell in line with Wall Street expectations.
Hingham, Mass.-based luxury apparel retailer Talbots (TLB: down $3.35 to $45.45, Research, Estimates) reported net income for the quarter ended May 5 of $40.1 million, or 62 cents a share, up from $32.7 million, or 52 cents a share, a year earlier. Analysts on average anticipated 62 cents a share, according to earnings tracker First Call.
Talbots also said it remains comfortable with its current fiscal plan, which calls for 15 percent earnings growth in the first half as well as second-quarter growth despite tough comparisons to extremely strong earnings a year earlier.
Sales in the quarter increased 10 percent to $401.1 million from $363.5 million. Talbots shares ended up $2.37 at $48.80 Monday.
Staples' first-quarter earnings were in line with Wall Street forecasts, and the nation's No. 2 office supply retailer sees the full fiscal year meeting expectations despite a weak second quarter and a slowdown in store expansion.
Staples (SPLS: up $0.48 to $16.00, Research, Estimates) said it anticipates second-quarter earnings between 8 and 10 cents a share, and its outlook for the full year remains in line with estimates. The consensus of analysts polled by First Call project second-quarter earnings of 10 cents a share and full-year earnings of 69 cents a share.
"We're being very conservative in our expenses, very conservative in our capital allocations and trying to build some momentum in what we assume will be a pretty lousy economy. And then if things turn around, as we hope they will, we should be in great shape once again," Staples CEO Thomas Stemberg told CNNfn's Market Call Tuesday, adding that spending has stabilized by its core customers, small businesses and home office operators. (506KB WAV) (506KB AIFF)
The Framingham, Mass.-based chain, which said it will open 10 fewer stores this year, reported net income for the quarter ended May 5 of $40 million, or 9 cents a share. That was unchanged from year-earlier results and matched the First Call consensus.
Revenue increased 4 percent to $2.7 billion from $2.6 billion.
Staples.com, the company's e-commerce business, achieved profitability for the first time on an operating basis in the quarter with sales that more than tripled to $213 million.
Stemberg and other Staples managers came under fire in March after canceling a planned IPO of its Web site and announcing plans to buy back its stock at prices more than double its initial valuation. Stemberg personally stood to gain $3 million from the transaction.
And B.J.'s Wholesale Club (BJ: up $2.55 to $47.65, Research, Estimates) reported a 27 percent increase in first-quarter earnings that beat Wall Street forecasts by 2 cents.
For the quarter ended May 5, the Natick, Mass.-based warehouse club reported net income of $23 million, or 31 cents a share, up from $18.1 million, or 24 cents a share, a year earlier.
Sales rose 11.1 percent to $1.13 billion from $1.02 billion a year earlier.
The company also repurchased 359,700 shares during the quarter at an average cost of $43.56, or a total of $15.7 million. 
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