Wal-Mart Profit Is Up 13%
Wal-Mart Stores Inc. said Tuesday that profit grew 13% in its fiscal fourth quarter, but tepid sales and a cautious outlook for the current year damped investors’ enthusiasm.
Holiday-quarter sales for the world’s largest retailer grew 8.6% to $89.3 billion, and for the year Wal-Mart posted a 9.5% increase to $312 billion.
But much of the gains came from the company’s aggressive expansion, which included a breakneck pace of new-store openings and acquisitions. Sales at stores open at least a year, a key measure of retail performance, grew a lackluster 3.1% in the United States during the fourth quarter and 3.4% for the year as Wal-Mart’s core low-income customers grappled with higher gasoline and utility costs.
“It was a tough year for Wal-Mart given the macroeconomic environment and its customer base being under pressure,” HSBC Securities analyst Mark Husson said.
Shares of the Bentonville, Ark.-based company slipped 36 cents to $45.74.
For the three months ended Jan. 31, Wal-Mart reported net income of $3.59 billion, or 86 cents a share, up from $3.16 billion, or 75 cents, a year earlier. That was a penny ahead of Wall Street’s average estimate, taking into account a 2-cent gain from a one-time tax benefit.
In a conference call with investors, Wal-Mart said profit this year would be hit by rising interest expenses -- as much as $500 million, or 8 cents a share -- on the debt incurred to buy back shares and acquire chain stores overseas.
“On one hand, the company made the quarter; on the other hand, it threw cold water” on the future numbers, said Robert Buchanan, an analyst with A.G. Edwards & Sons. “Management is talking a good game with regard to what it plans to do to improve customer service, but as I get around and walk through the stores, I continue to believe this company has work to do.”
In part to compete with rival Target Corp. and lure more affluent customers, Wal-Mart has said it plans to add faux hardwood floors, wider aisles and stainless steel restroom fixtures.
The company has said it will upgrade 1,800 stores in the next 18 months and add 1,500 stores over the next few years.
Wal-Mart last year added 655 stores internationally and relocated or expanded 28 more; in the United States, the company added 157 stores and expanded or relocated 185, for a total of 3,856 domestic stores and 2,285 international locations.
