Walmart profits look good

 

Wal-Mart sees modest profit gain in ‘volatile economy’

1 hour ago

NEW YORK (AFP) — Wal-Mart Stores, Inc. reported a modest four percent rise in quarterly profits on Tuesday as the world’s biggest retailer appeared to weather an abrupt slowdown in US economic growth.

Wal-Mart said net income for its fiscal fourth quarter increased four percent to 4.1 billion dollars for the three months ended January 31 compared with the same period a year earlier.

Wal-Mart’s earnings were generally in line with the expectations of most Wall Street analysts, and profit accelerated sharply from the prior quarter.

The retailer, known for its large box-like retail stores and discounted merchandise, recorded quarterly earnings per share of 1.02 dollars. Earnings rose over seven percent from 95 cents per share a year ago.

Despite uncertain economic headwinds, the retailer’s top executives said price discounting and an increased focus on customer service had enabled Wal-Mart to reap a quarterly profit.

“Customers were more cautious in their spending in January. In a volatile economy, I believe we are well positioned to succeed,” Wal-Mart’s president and chief executive Lee Scott said in a statement.

US economic growth slowed sharply during the fourth quarter, despite Federal Reserve interest rate cuts, to a 0.6 percent annualized clip amid a deep housing slump and a related credit squeeze.

The Fed has stepped up its rate-cutting campaign this year and the administration of US President George W. Bush has backed a giant 168-billion-dollar economic stimulus plan aimed at boosting growth.

Economists are divided over whether the economy will tip into a recession or continue expanding.

“The price leadership strategy we put in place at the beginning of the year was exactly the right strategy for our customers around the world in a tough economic environment,” Lee said.

Wal-Mart’s CEO also noted that quarterly sales topped 100 billion dollars for the first time, saying the company was the first retailer to burst this sales benchmark.

The retail behemoth’s net sales increased 8.3 percent during the quarter to 106.3 billion dollars.

Investors appeared to welcome Wal-Mart’s earnings report as the Dow Jones Industrial Average stock barometer opened stronger in morning trading, Wal-Mart is one of the 30 leading stocks that make up the Dow.

Wal-Mart’s shares were up 0.6 percent at 49.75 dollars in morning deals.

“Traders breathed a sigh of relief that Wal-Mart delivered fourth quarter earnings that were in-line with estimates and offered guidance that matched analysts’ current estimates,” said Fred Dickson, a market analyst at DA Davidson & Co.

Wal-Mart executives are predicting fiscal first quarter earnings of between 70 and 74 cents per share, and fiscal year 2009 earnings of between 3.30 and 3.43 dollars per share.

Aside from the United States, the Bentonville, Arkansas-based retailer also operates stores in Britain, Brazil, Canada and Japan among other countries.

Annual sales for the twelve months ended January 31 rose 12.8 percent to 12.7 billion dollars. Earnings per share for the year rose to a better-than-expected 3.13 dollars, compared with 2.71 dollars in the prior twelve month period.