Which Retailers Are Popping and Dropping After Earnings?

On Tuesday, U.S. retail sales rose 0.5% in October, beating expectations and giving the economy a much-needed boost as it entered the final quarter of 2011. Last month’s gain followed a 1.1% increase in September.  Demand for automobiles climbed in October, while purchases of electronics jumped by the most in two years. Consumer spending, which accounts for roughly 70% of the U.S. economy, must continue its upward trend in order to bolster against the growing European credit crisis that continues to threaten sales overseas.

Along with the newly released retail sales report, several retail companies reported quarterly earnings on Tuesday.  Let’s take a closer look at these six retailers:

Wal-Mart (NYSE:WMT) reported third quarter results with net sales rising 8.2% to $109.5 billion. Earnings were $3.34 billion (97 cents a share), compared to $3.44 billion (95 cents a share) last year. The company had estimated earnings to come in at 95 cents to $1.00 a share, whereas analysts had estimated 98 cents. Key U.S. sales numbers rose higher for the first time in two years.  However, Wal-Mart was unable to pass on rising grocery costs to its customers as it hoped to attract cost-conscious shoppers in a dismal job market and shaky economy. “They were clearly being aggressive in pricing and gaining share, but they didn’t get the leverage on the cost side,” said ITG Investment Research analyst John Tomlinson. The company also incurred higher overheads and expenses totaling $536 million, up 40.7%, relating to its thrust on e-commerce.  Shares dropped 2.4% on Tuesday.

Shares of Staples Inc. (NASDAQ:SPLS) also closed lower after reporting third quarter results.  Net income for Staples, Inc. rose to $326 million (47 cents per share), compared to $288.7 million (40 cents per share) in the same quarter a year earlier. This marks a rise of 12.9% from the year earlier quarter.  “Our results in North America reflect our team’s ability to drive strong profit improvement in a tough environment,” said Ron Sargent, Staples’ chairman and chief executive officer. “International results were weaker than expected as tight expense management was more than offset by very challenging top line trends.”  Shares are down about 38% year-to-date.

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On Tuesday, Dick’s Sporting Goods (NYSE:DKS) and Saks Incorporated (NYSE:SKS) popped 4.32% and 1.67%, respectively.  Net income for Dick’s Sporting Goods Inc. more than doubled to $41.5 million (33 cents per share), compared to $16.9 million (14 cents per share) last year.  Meanwhile, net income for Saks fell 51% to $17.8 million (11 cents per share), compared to $36.3 million (20 cents per share) a year earlier.

Despite reporting strong earnings, shares of TJX Companies Inc. (NYSE:TJX) and Home Depot (NYSE:HD) remained relatively flat on Tuesday.  TJX closed .59% higher after reporting net income for the department store rose 9% to $406 million ($1.06 per share), compared to $372.3 million (92 cents per share) in the same quarter a year earlier.  The company has now seen net income rise in two straight quarters. In the second quarter, net income rose 14.2% from the year earlier.  Shares of Home Depot closed .47% lower after reporting net income for the home improvement retailer increased 12% to $934 million (60 cents per share), compared to $834 million (51 cents per share) in the same quarter a year earlier.

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