Wal-Mart Stores’ Profit Soars 34% in First Quarter
Wal-Mart Stores Inc. posted a 34% jump in profit for the fiscal first quarter to $1.11 billion, or 25 cents a share, as the world’s largest retailer continued to distance itself from the rest of the industry.
The discount retailer’s results topped forecasts for the sixth quarter in a row, beating by 3 cents the average estimate of analysts polled by First Call Corp.
Sales rose 16% to $34.7 billion, led by demand for grocery items at its U.S. stores. Chief Executive David Glass has been trying to get customers to visit Wal-Mart’s stores more often by stocking snacks and canned goods at the discount stores and speeding the expansion of its super-centers, warehouse-size locations that include full grocery departments.
Wal-Mart also is holding down expenses by keeping inventories lean and forcing suppliers to absorb more costs. That helped fatten gross margins to 21.5% of sales from 21.1%.
Sales at stores open at least a year rose 9.3%, helped by demand for clothing and lawn and garden goods.
Bentonville, Ark.-based Wal-Mart has opened several stores that carry mainly groceries. Those stores are about 40,000 square feet, less than half the size of its discount stores.
Earnings got the biggest boost from Wal-Mart’s U.S. discount stores and super-centers. Operating profit rose 26% as sales gained 15%.
At Wal-Mart’s Sam’s Clubs, operating profit rose 14% and sales grew 11%.
Profit at the fast-growing international unit declined 28% as it remodeled recently acquired stores in Germany; sales rose 26%.
Wal-Mart shares jumped $2.13 to close at $47.31 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Abercrombie & Fitch Co. said its net income soared 98% to $12.5 million, or 23 cents a share. It beat by 6 cents the average estimate of analysts polled by First Call Corp. Revenue at the retailer of casual apparel jumped 40% to $188.3 million, while same-store sales gained 22%. The company also announced a 2-for-1 stock split.
* Discount retailer Dollar General Corp. said its profit grew 19.6% to $36.3 million, or 17 cents a share, a penny better than analyst estimates, on a 19.8% jump in sales to $844.6 million.
* OfficeMax Inc. said its earnings rose 15% to $22 million, or 19 cents a share, in the fiscal first quarter, 2 cents better than analyst forecasts, as it expanded its assortment of office products and reduced low-profit computer promotions. Sales rose 11% to $1.18 billion. Sales at stores open at least a year in the company’s main business--which includes office supplies, furniture and printing services--rose 3%.
