Wal-Mart’s profit rises, lifting shares

Wal-Mart Stores Inc. reported a higher-than-expected profit Tuesday as it controlled expenses and cut prices to draw customers into its U.S. stores earlier than ever for holiday shopping, sending its shares to their highest one-day gain in five years.

The world’s No. 1 retailer also raised its full-year earnings forecast, and its shares rose 6.1%.

“I can’t say that this is it and the company’s back on the upswing,” Joseph Beaulieu, a Morningstar analyst, said of the third-quarter results. But “in a very tough environment, this is a company that can still pull it off.”

Wal-Mart said net income rose 8% to $2.86 billion, or 70 cents a share, in its fiscal third quarter that ended Oct. 31, from $2.65 billion, or 63 cents, a year earlier.

Third-quarter sales rose almost 9% to $90.9 billion. Sales in the U.S. division rose 6.4% to $57.65 billion, while sales in the company’s international operations rose almost 17% to $22.4 billion.

Excluding a tax benefit from the sale of real estate, earnings were 69 cents a share, beating analysts’ average forecast by 2 cents, according to Reuters Estimates.

Bentonville, Ark.-based Wal-Mart is trying to revive sales at its U.S. stores and appeal to shoppers who are feeling the pinch of higher food and fuel costs and the downturn in the housing market.

In the last several weeks, it has cut prices on popular toys and 15,000 other items to lure consumers for holiday shopping.

The company also is keeping a close eye on expenses, reducing costs in part through programs it has already announced, such as a system that schedules hourly employees based on the number of shoppers in a store.

Wal-Mart forecast earnings per share from continuing operations of 99 cents to $1.03 for the fourth quarter and $3.13 to $3.17 for the full year.

The outlook includes an after-tax restructuring charge of $40 million in the fourth quarter for the company’s Japanese operations. Wal-Mart said last month that it would acquire the remaining shares of its Japanese subsidiary, Seiyu Ltd.

Analysts expect earnings of $1.01 a share for the fourth quarter and $3.09 for the year, according to Reuters Estimates.