Wal-Mart Reports 21% Profit Gain
Wal-Mart Stores Inc. said its profit increase exceeded expectations in the fiscal fourth quarter as it lured more shoppers with price cuts and kept a lid on costs.
The world’s largest retailer said net income rose 21% to $1.56 billion, or 70 cents a share, from a year earlier. The results topped analysts’ forecasts by 3 cents a share, the fifth straight quarter of better-than-expected results, according to First Call Corp.
Revenue jumped 15% to $40.8 billion on demand for brand-name goods such as electronics and home decor during the holiday season and everyday items such as food and toiletries. Sales at stores open at least a year rose 8.7%.
The performance pushed Wal-Mart shares up $3.19 to close at $87.56 on the New York Stock Exchange, after earlier reaching a record $88.
The stock has almost doubled in the last 12 months.
Profit at Wal-Mart’s international division climbed 33% as sales surged 26%. The company has said it wants the international unit to generate a third of annual sales and earnings growth the next few years.
Operating profit at the discount stores and super-centers rose 14%, and sales also rose 14%. Sam’s Club profit rose 8.2%. Revenue at the membership chain rose 12%.
For the year, Wal-Mart’s earnings jumped 27% to $4.43 billion, or $1.98 a share, from 1997, as sales grew 17% to $137.63 billion.
The retailer marked down more goods in the second half to keep its prices below those of rival discounters, analysts said.
Wal-Mart offset the lower prices through higher sales, while Chief Executive David Glass squeezed costs by demanding better terms from suppliers and keeping inventory lean.
The retailer last year operated about 1,869 Wal-Mart discount stores, 564 super-centers that combine discount and food items, and 451 Sam’s Clubs in the U.S. at the end of the quarter. It also had more than 600 stores abroad.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
RETAILING
* Abercrombie & Fitch Co. said fiscal fourth-quarter earnings climbed 71% to $60.2 million, or $1.12 a share, far exceeding estimates of 92 cents, as revenue soared 44% to $304.6 million. Sales at stores open at least a year rose 26% in the quarter, as college students snapped up the retailer’s casual clothes during the holiday season.
* Sharper Image Corp. reported a 62% rise in fourth-quarter profit to $9.4 million, or $1 a share, matching Wall Street predictions, as revenue jumped 15% to $110.9 million. Sales in Sharper Image stores grew 11%, and catalog sales jumped 25%, including a 243% jump in Internet sales to $3 million. The company also said it plans to expand its Internet operations.
OTHER INDUSTRIES
* Campbell Soup Co.’s fiscal second-quarter profit fell 25% to $219 million, or 49 cents a share, matching estimates. Revenue fell 8.9% to $1.83 billion.
* Clear Channel Communications Inc., the No. 2 U.S. owner of radio stations, said fourth-quarter earnings fell a more-than-expected 59% to $9.04 million, or 4 cents a share, because of higher expenses related to acquisitions. Analysts had forecast 9 cents. Revenue rose 94% to $441 million.
* Public Storage Inc. said its net income jumped 31% in the fourth quarter to $69.4 million, with per-share earnings up 22% to 60 cents, reflecting an increase in the number of shares outstanding. The results matched analyst estimates. Revenue grew 10% to $148.6 million.
* WellPoint Health Networks Inc., one of California’s biggest health insurers, said fourth-quarter earnings rose 8.7% to $67.4 million, or 99 cents a share, a penny higher than analyst forecasts, as membership grew and the company kept costs under control. Revenue from premiums rose 16% to $1.56 billion. Total medical membership rose 3.8%, led by growth in WellPoint’s biggest unit, Blue Cross of California.
