Sales Abroad Boost Wal-Mart
Wal-Mart Stores Inc., the world’s largest retailer, said Tuesday that its fiscal fourth-quarter profit rose 16%, boosted by purchases of clothing and sales abroad.
Sales of Wrangler Five Star Premium jeans and other brand-name clothing and DVD players for less than $50 helped widen margins as sales growth slowed during the holidays.
Chief Executive H. Lee Scott improved Wal-Mart’s gross profit, or the amount of sales left after the cost of goods, for a fourth straight quarter after it had fallen because of a push into groceries.
Net income climbed to $2.53 billion, or 57 cents a share, from $2.19 billion, or 49 cents, a year earlier.
Sales in the three months ended Jan. 31 rose 11% to $71.1 billion, the company said. Sales at Wal-Mart discount stores and supercenters, which also sell groceries, rose 11%.
Profit at Sam’s Club warehouse stores fell 0.7%, the second straight quarterly decline. Sam’s Club, which sells food and some office supplies in bulk, has faced increased competition as Costco Wholesale Corp. has expanded and supermarkets have reduced prices.
International profit surged 38% and sales increased 13%.
“That international area is where investors are going to look for growth,” said David Abella, an analyst with Rochdale Investment Management, which manages about $900 million and owns Wal-Mart shares. “The fact that it’s doing nicely in a volatile international market is definitely a big positive.”
Wal-Mart, based in Bentonville, Ark., had been expected to earn 56 cents a share in the quarter, according to analysts surveyed by Thomson First Call.
Wal-Mart’s shares fell 7 cents to $49.08 on the New York Stock Exchange. The news was announced before trading closed.
Sales at stores open at least a year increased 2.7% in the quarter, less than half the rate in the year-earlier period. The pace of growth slowed through the holidays as consumers concerned about their jobs and the economy pared spending, causing Wal-Mart to miss its December sales forecast.
First-quarter net income is expected to rise to 40 cents to 42 cents, from 37 cents in the year-ago period. That includes the effect of accounting for stock options as an expense and a change in the way the company accounts for lease terminations, Chief Financial Officer Thomas Schoewe said.
By stocking more national brands, such as VF Corp.’s $14.97 Wrangler Five Star Premium jeans and Levi Strauss & Co.’s Signature line of jeans, Wal-Mart can attract a broader base of customers and still cater to its traditional shoppers.
