Wal-Mart Profit Tops Consensus
Wal-Mart Stores Inc., the world’s biggest retailer, said Tuesday that fiscal first-quarter profit rose 19% and that earnings this quarter will be near analysts’ highest forecasts.
Net income in the quarter ended April 30 rose to $1.33 billion, or 30 cents a share, from profit from operations of $1.11 billion, or 25 cents, a year ago. Sales rose 24% to $43 billion as international sales more than doubled.
Analysts’ consensus earnings forecast was 29 cents a share, according to First Call/Thomson Financial.
Sales at U.S. stores open at least a year rose 9.1% in the first quarter, and Wal-Mart said it doesn’t expect spending to slow. The company’s shares have tumbled about 25% from a high in December on concern that five interest-rate increases by the Federal Reserve since June, higher oil prices and rising inflation would crimp consumer spending in the second half.
Shares of Bentonville, Ark.-based Wal-Mart rose 63 cents to close at $53 on the New York Stock Exchange. The stock has fallen from a record $70.25 on Dec. 31.
Wal-Mart is expected to earn 33 cents to 36 cents in its fiscal second quarter, according to First Call/Thomson Financial. In the year-ago period, it had profit from operations of 31 cents a share.
Wal-Mart Chairman David Glass shrugged off recent warnings from analysts that retail earnings would probably be pressured by an expected slowdown in consumer spending.
“We currently do not see signs that support that theory,” Glass told analysts in a conference call.
Because the discounter merchandises basic items such as toothpaste and food rather than luxury goods that sell best in a booming economy, Wal-Mart’s market share is likely to grow if the economy slows, Glass said.
Shares of Wal-Mart were battered last week after prominent Goldman Sachs retail industry analyst George Strachan cut his ratings on Wal-Mart and other retailers, citing an expected cooling-off of the U.S. economy.
As of April 30, Wal-Mart had 1,784 of its namesake discount stores and 465 Sam’s Club wholesale warehouses in the U.S. It also has 1,000 international locations.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Abercrombie & Fitch Co., a retailer of clothes for young adults, said that fiscal first-quarter earnings rose 8%, but that second-quarter earnings will be less than expected on weak sales of women’s clothing. Net income rose to $16.2 million, or 16 cents a share, in the quarter ended April 29, from $15 million, or 14 cents, a year ago. Sales rose 9.7%, to $206.6 million. The company said second-quarter earnings will be 16 to 18 cents a share, less than the average 21-cent estimate of analysts.
* CVS Corp., the No. 2 drugstore chain, said first-quarter profit rose 16%, led by increased sales of prescription drugs. Net income rose to $191.3 million, or 47 cents a share, from $164.6 million, or 40 cents, a year ago. Sales rose 12% to $4.74 billion. Pharmacy sales, or sales of prescription drugs only, accounted for 62% of revenue.
* MetLife Inc., the largest U.S. life insurer, said first-quarter operating earnings rose 20%, lifted by higher investment income and growth in its mutual fund and individual and group insurance sales. In its first earnings release since becoming a publicly traded company, New York-based MetLife said profit from operations rose to $379 million, or 48 cents a share, from pro forma results of $315 million a year ago. The results beat estimates by 2 cents.
* OfficeMax Inc., the third-largest U.S. office supply chain, had a fiscal first-quarter loss because of higher spending on its Internet business and an upgrade of the company’s computer software. The loss was $2.08 million, or 2 cents a share, in the period ended April 22, contrasted with net income of $22 million, or 19 cents, a year earlier. Sales rose 14% to $1.34 billion. The loss matched analysts’ estimates.
* Volkswagen, Europe’s largest car maker, said first-quarter profit jumped 36% as the company’s tax rate fell and U.S. sales of the Volkswagen Passat and Audi A6 rose. Net income rose to $221.8 million from $163 million a year ago. Sales increased 14.5% to $18.8 billion.
