. . . While Wal-Mart Has Record Year : Discount Chain Earns $601.4 Million for Fourth Quarter, $1.61 Billion for 1991
Wal-Mart Stores Inc., the nation’s largest retail chain, said Wednesday that its profit leaped 25% to a record $1.61 billion in 1991, as its rapid expansion overcame the recession and weak consumer spending.
The discount chain capped a prosperous fiscal year with a fourth-quarter earnings jump of 25%--to a record $601.4 million--at a time when other retailers are reeling from the weak economy. The retailing industry was jolted Wednesday with the news that McCrory Corp., a leading five-and-dime operator, filed for Chapter 11 bankruptcy court protection from creditors.
Analysts said Wal-Mart’s strong sales and earnings came as no surprise; the chain’s sales have increased an average of 32% a year since 1985.
“It’s a very exciting and dynamic company,” said Walter F. Loeb of Loeb Associates in New York. “I expect it to continue to grow because its appeal comes from its honest pricing, and not every store does that.”
The Bentonville, Ark.-based company’s fiscal-year earnings were $1.29 billion in 1990. Sales last year rose to $43.9 billion from $32.6 billion in 1990--a 34.6% increase.
Wall Street applauded the earnings report. Wal-Mart stock jumped $2.375 to $53.875, leading most retail stocks higher on the New York Stock Exchange.
Wal-Mart has 1,934 stores that operate under the names of Wal-Mart, Sam’s Clubs membership warehouse stores, Hypermart USA and Supercenter, its new grocery stores. There are 23 Wal-Mart stores in California, with negotiations going on for another in Burbank, spokeswoman Jane Arend said.
The company opened 207 stores last fiscal year. Arend credited Wal-Mart’s sales jumps to its speedy growth and loyal customer base.
“The economy has been very tough for people,” she said. “And when money is tight, people can make their dollar stretch by shopping at Wal-Mart.”
The $601.4-million profit for the fourth quarter, which included the holiday selling season, compared to $481.8 million the previous year. Sales rose to $13.6 billion from $10.4 billion.
Ed Weller, an analyst with Montgomery Securities in San Francisco, said Wal-Mart’s success is a result of low prices and good customer service. “It’s been one good quarter after another,” he said. “There’s going to be more growth for the store.”
While billionaire founder Sam Walton, 73, is battling a form of bone cancer, Wal-Mart executives have no plans to slow the pace of growth. The company plans to open another 160 Wal-Mart stores, adding Idaho, Washington and Oregon to the 42 states where the chain already operates, a spokeswoman said.
The company also plans to open an undetermined number of Sam’s Club membership warehouse stores.
If expansion goes as planned, analyst Loeb said sales could hit $66 billion by next year.
Wal-Mart “will gain share of market from other retailers,” Loeb said. “That’s of course very exciting for the company but very disturbing for the rest of the industry.”
