Wal-Mart Beats Expectations
NEW YORK (AP) _ Wal-Mart Stores Inc., the world’s largest retailer, managed to cross the $2 billion earnings mark for the first time despite what executives described as a ``challenging environment.″ The fourth-quarter results beat Wall Street expectations.
For the three months ended Jan. 31, Wal-Mart earned $2.004 billion, or 45 cents per share, up 4.5 percent from $1.92 billion, or 43 cents per share, in the year-ago period, the Bentonville-based company said Tuesday.
Analysts surveyed by First Call/Thomson Financial were expecting 44 cents per share.
Sales jumped 10 percent to $56.56 billion, up from $51.39 billion in the year-ago period.
Shares of Wal-Mart were up $1.04 to $53.40 in afternoon trading on the New York Stock Exchange.
The results come as many merchants struggle with a slowing domestic economy and plummeting consumer confidence.
Home Depot, the world’s largest home improvement retailer, based in Atlanta, reported a 20 percent drop in fourth-quarter profits Tuesday and cautioned that it continues to be stymied with sluggish sales and weak prices for its products. May Department Stores reported last Wednesday that its fourth-quarter earnings rose 1 percent, meeting Wall Street expectations.
But Jeff Feiner, an analyst at Lehman Brothers, said Wal-Mart has proven its ability to weather a prolonged consumer spending slowdown. During the last two downturns _ in 1987 and 1991 _ Wal-Mart gained an estimated 2 percent to 4 percent in sales over its direct competitors Target Corp. and Kmart Corp. through price reductions and expanding its food offerings, Feiner said.
Lee Scott, Wal-Mart’s president and chief executive officer, was optimistic in a pre-recorded statement.
``We don’t think spending will slow further from current levels,″ he said. In fact, Scott predicted a rebound in consumer spending fueled by a combination of lower utility bills with the arrival of warmer weather, interest rate reductions and possible tax cuts.
Sales at Wal-Mart stores open more than a year, or what is known as same-store sales, rose 3 percent, while sales at its Sam’s Club warehouse division rose 3.3 percent. A year ago, same-stores sales rose 6.3 percent. Same-store sales are considered the best measure of a retailer’s strength.
Internationally, Wal-Mart had an operating profit of $490 million for the most recent quarter, an increase of 8.9 percent, compared with $450 million for the similar period in the previous year. Its stores in Germany, which have been struggling for the past several quarters, are expected to reach profitability in fiscal 2003, the company said during its conference call.
For the year ended Jan. 31, Wal-Mart earned $6.30 billion, or $1.40 per share, on sales of $193.30 billion. In the previous fiscal year, Wal-Mart earned $5.38 billion, or $1.20 per share, on sales of $166.81 billion.
Wal-Mart operates more than 3,100 stores in the United States as well as more than 1,000 stores in nine other countries.