JCP J C Penney Company Inc

By Paul Ziobro 

American consumers shrugged off pre-election jitters this fall and spent more on home-improvement projects, sporting goods and off-price clothing, a promising sign ahead of the Black Friday retail frenzy.

Now that the election is over and airwaves are freed up to advertise more, retailers are in a race to log as many sales as possible before Christmas, a stretch that can make or break a retailer's financials for the year.

TJX, which owns T.J. Maxx and other discount chains, said it is already stepping up marketing. "Our TV commercials have just launched and will be running every week throughout the holiday season," said Chief Executive Ernie Herrman.

Home Depot Inc., Dick's Sporting Goods Inc. and TJX on Tuesday all reported strong sales growth in the quarter through October, with gains of at least 5% at existing stores from the year before. The results came on the same day the Commerce Department reported the best two-month performance of national retail sales in at least two years.

The data suggest a healthy profile for the U.S. consumer ahead of the all-important holiday shopping season. The National Retail Federation estimates sales over the period will rise 3.6% from a year ago, slightly higher than the 3.4% growth last year.

The earnings reports Tuesday from three large chains show the continuation of outside factors have buoyed their results. However, shares of all three companies fell in Tuesday trading, after rallying in the wake of the election.

Later this week, investors will get another measure of spending when Wal-Mart Stores Inc. and Target Corp. report their latest results.

While some retailers thrive with tailwinds like a rising housing market or a competitor's bankruptcy, pockets of weakness remain. Department stores Macy's Inc., Kohl's Corp. and J.C. Penney Co. posted sales declines in their recent quarters and some big-box retailers such as Target are struggling to attract shoppers.

Online shopping also is proving to be a major competition, siphoning off shopping trips to physical stores.

Amid concerns that the final weeks of the presidential election had weighed on sales, finance chief Carol Tome said "that didn't happen at the Home Depot." One reason is that much of Home Depot's business are purchases that shoppers can't forego. "If your refrigerator stops working, you're going to replace it no matter who is elected to office," Ms. Tome said.

For the quarter, Home Depot's sales rose 5.5% at existing stores, including 5.9% in the U.S. The rise in housing prices has made homeowners more willing to spend on projects like bathroom remodels and roof replacements.

Earnings rose 14% to nearly $2 billion, helped by a rising value of each transaction. k

TJX, which also owns Marshalls and HomeGoods, relayed a similarly optimistic message saying more shoppers came to its stores to hunt through its off-price goods driving up its sales.

"Our traffic, sales and merchandise margin increases tell us our strategies are working," said Scott Goldberg, TJX's chief financial officer. The margin increase, however, was offset by rising wages.

The retailer, which opened 110 new stores in the period, reported a 6.3% drop in net income to $549.8 million as financial charges on debt and pensions eroded its 6.9% rise in total sales.

Meanwhile, sports retailer Dick's said sales rose 5.2% at existing stores, as it picked up market share in the wake of the bankruptcy of rivals, including Sports Authority and Golfsmith. "Looking ahead onto the fourth quarter, we are confident our assortment and marketing will help us to continue to capture displaced market share this holiday," Chief Executive Edward Stack said, though he raised concerns that warmer weather could depress sales of high-margin cold-weather gear.

TJX, which also owns Marshalls and HomeGoods, said tighter inventory in the industry hadn't hurt its ability to scoop up excess merchandise to sell at its discount chains. "The market is loaded with goods," CEO Mr. Herman said.

Mr. Stack played down concerns that the election had kept shoppers on the sidelines. "We don't really think it had any impact," he said.

Suzanne Kapner and Sara Germano contributed to this article.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

November 16, 2016 02:47 ET (07:47 GMT)

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