Wal-Mart profit rises 6.9% but outlook cautious

LITTLE ROCK, Ark. – Wal-Mart Stores Inc. today said first-quarter profits rose 6.9%, but the world’s largest retailer offered a guarded outlook as consumers wrestle with higher energy and food costs.

Higher sales helped Wal-Mart beat Wall Street’s expectations, which President and CEO Lee Scott attributed to a strategy begun two years ago to make inventory management more efficient and improve customer service.

“There are still uncertainties during the rest of the year,” Scott said. “The economy is playing a critical factor in 2008.”

Scott and other executives said Wal-Mart is in a good position to meet customers’ needs in the down economy and later, when there is a rebound.

Wal-Mart earned $3.02 billion, or 76 cents per share, in the three months ended April 30, up from $2.83 billion, or 68 cents, a year earlier.

Analysts polled by Thomson Financial had projected earnings of 75 cents per share.

Wal-Mart Chief Financial Officer Tom Schoewe said the company expects second-quarter sales in stores open at least a year to be between flat and up 2%. He said the company expects to earn between 78 cents per share and 81 cents per share. Wal-Mart has not been able to gauge how much of an impact the federal tax rebate checks will have on shoppers, Schoewe said.

“Higher transportation costs will remain a potential headwind for us the rest of the year,” Schoewe said.

The company had overall revenue of $95.30 billion, up 10.3% from $86.41 billion a year ago. Analysts projected revenue of $93.47 billion for the quarter.

Without fuel, same-store sales for the first quarter were up 2.9% at Wal-Mart’s domestic properties, rising 2.7% in the Wal-Mart Stores division and 3.6% at Sam’s Clubs.

Wal-Mart’s corporate expenses are up because of a program to improve information systems for finance, merchandising and human resources.

Wal-Mart’s results came as the Commerce Department reported that retail sales fell 0.2% in April, with consumers hurt by high gasoline prices and a down economy.