Wal-Mart profit up 17%
Wal-Mart Stores Inc. raised its full-year earnings forecast Thursday after second-quarter profit rose more than expected, helped by tight inventory controls and a renewed focus on low prices that is attracting financially squeezed shoppers.
But the world’s largest retailer predicted slower sales growth at its established stores in the U.S. for the current quarter, as the benefits of the federal stimulus checks dry up and customers find it more difficult to stretch their paycheck to the next payday.
Meanwhile, upscale department store chain Nordstrom Inc. and mid-level retailer Kohl’s Inc. struggled, reporting double-digit percentage declines in earnings as shoppers cut back on apparel. Nordstrom reduced its full-year profit forecast while Kohl’s upgraded its full-year outlook to reflect -- like Wal-Mart -- stricter inventory controls that boosted profit margins.
Wal-Mart said it earned $3.45 billion in the quarter ended July 31, up 17% from $2.95 billion a year earlier. Profit from continuing operations rose 9.3% to $3.39 billion while sales gained 10% to $101.6 billion. For the quarter, the Bentonville, Ark.-based retailer posted same-store sales growth of 4.5%, excluding fuel sales, compared to a 1.9% increase a year earlier.
The company now expects to earn $3.43 to $3.50 per share for the year, up from a full-year forecast issued in February of $3.30 to $3.43 per share. Wal-Mart also said its profit for the current quarter should be from 73 cents to 76 cents per share.
Wal-Mart’s chief financial officer, Tom Schoewe, attributed the better second-quarter profit to tighter inventory controls, which led to fewer markdowns on merchandise. But the company emphasized that the economy remains difficult.
Wal-Mart predicts same-store sales growth to slow to 1% to 2% for the third quarter, a sharp decline from the 4.5% it saw in the second quarter.
Nordstrom Inc. reported a 21% drop in second-quarter profit and cut its full-year forecast as its affluent consumers pull back on fashions in a tough economy. The Seattle-based chain said it earned $143 million, or 65 cents per share, in the three-month period ended Aug. 2, compared with $180 million, or 71 cents, a year earlier. Sales fell 4.3% to $2.29 billion.
Nordstrom reported a 6% drop in same-store sales. The company said it now expected earnings per share for its fiscal year ending Jan. 31 to be in the range of $2.55 to $2.65 per share.
Meanwhile, Kohl’s second-quarter profit fell more than 12% despite a 3.8% increase in sales. The Menomonee Falls, Wis.-based company said it earned $236 million, or 77 cents per share, during the three-month period ending in August. That was down from the same period last year, when Kohl’s earned $269.2 million, or 83 cents per share. Sales rose 3.8% to $3.7 billion. But same-store sales fell 4.6%.
Shares of Wal-Mart rose 22 cents to close at $58.10. Nordstrom’s shares rose almost 2%, or 53 cents, to $30.22, before the earnings news. Kohl’s stock rose 68 cents to close at $48.27 before the earnings release.
