Wall Street Watches Corporate Earnings
| NEW YORK
WALL Street is preoccupied with corporate profits these days.
Analysts and investors are awaiting the release by major United States corporations of their first quarter earnings reports in the next few weeks. Because of weakness in the economy, these are not expected to be particularly good. Second-quarter profits, however, should be up. The uncertainty is whether investors will wait around in the market for more-upbeat second-quarter results, or whether they will pull out of the stock market for alternative investments.
Profits last year were generally terrible. Fortune magazine called profits for the Fortune 500 - the largest industrial concerns in the US - "an unparalleled disaster." Profits tumbled 41 percent for the Fortune 500; 103 of the companies, 20 percent of the 500, posted losses.
Still, profits should be up substantially later this year, says Joseph Tigue, managing editor of Standard & Poor's "Outlook," an analytical market review.
"First-quarter  results are a very big question mark," Mr. Tigue says. "We don't expect any kind of strength in terms of earnings, although there will be some improvement over the first quarter of last year. The second quarter will be better because of the firming now taking place in the economy." Also, he notes, companies have taken steps to boost earnings by slashing payrolls.
Another factor that should make 1992 and 1993 profit margins look better: There were many accounting write-offs in recent quarters, says David Hale, chief economist for Kemper Financial Services Inc. Such special charges are expected to decline in 1992, allowing operating profits to rise.
Low first-quarter profits are not likely to send the market into turmoil, says Tigue, since "most savvy investors are discounting first-quarter results anyway." But "if investors are dissatisfied with second-quarter earnings, that could be very bad for the market." Tigue expects low interest rates to boost second quarter profits. Moreover, he says, most investors have nowhere else to go for a better investment train than the US stock market. "A lot of foreign markets, such as Tokyo, are not looking good; " the bond market is uncertain; money market funds offer low yields. K Mart, retail revolutionary, turns 30
A landmark anniversary in retailing is being celebrated on Wall Street this spring: K Mart turns 30 years old. That is no small accomplishment for an organization that was once known as a lively but unassuming dime-store chain.
Back in the early 1960s, K Mart was still the S. S. Kresge Company, with Kresge dime stores found in most urban areas. But Kresge president Harry Cunningham was intrigued by the few independent discount stores he saw opening in parts of the US. So in 1962 Kresge opened its first K Mart discount store, in Garden City, Mich. In 1977 Kresge formally became K Mart Corporation.
"For all practical purposes, K Mart created the discount retailing business in the United States on a national basis," says Janet Mangano, a retail analyst with Burnham Securities Inc., an investment house. Culturally and economically, Kresge revolutionized retailing, she says, shifting shopping from downtown department stores to discounters and speciality stores in outlying malls.
Today, says Ms. Mangano, Wal-Mart has moved ahead of K Mart in retailing market share and profits by aggressively expanding into "untapped markets." But K Mart has survived and flourished by adding specialty chains, such as Waldenbooks, PACE Membership Warehouse clubs, and Pay Less Drug Stores.
Mangano predicts the market-share clout of Wal-Mart and K Mart will continue to enlarge over once-undisputed retail champion Sears. But Sears retains enormous leverage: Its net income rose 42 percent last year, to $1.3 billion. The only catch: The rise resulted from gains at Dean Witter & Co. and Allstate Insurance, two subsidiaries, not its retail operations.