Wal-Mart profit climbs 22%
NEW YORK - Wal-Mart Stores Inc., one of the recession’s biggest beneficiaries, felt the pinch during the fourth quarter as quarterly sales fell at its namesake US stores for the first time.
Still, overseas growth and a concerted cost-cutting campaign pushed profit up 22 percent.
The discounter faced tough price competition from rivals during the holidays. That contributed to a decline in customer counts and spending.
The company said that a key measure of sales showed its third consecutive quarterly decrease as it continues to grapple with deflation in groceries and electronics and a tough economy.
The company also offered a tepid earnings outlook, sending shares down 59 cents, to $53.47.
The sales weakness at its namesake US division is happening even as the discounter says it continues to benefit from affluent shoppers trading down to its stores, but the results show that keeping these new customers may prove more difficult when the economy rebounds.
Wal-Mart has promised investors that it plans to widen the price gap between itself and rivals as it cut costs and reinvests those savings to lower prices, which in turn drives sales.
Wal-Mart earned $4.63 billion, or $1.21 per share, in the quarter ended Jan. 31. That compares with $3.8 billion, or 96 cents per share, in the same quarter last year.
Excluding a 10 cents-per-share tax benefit and a 4 cents-per-share charge related to several business restructurings, the company earned $1.17 per share.
The company says that total sales rose 4.4 percent to $113.6 billion. However, sales at stores open at least a year fell 1.6 percent. That’s a key measure of a retailer’s health.
Analysts surveyed by Thomson Reuters expected a profit of $1.12 per share on revenue of $114.4 billion.
Mike Duke, Wal-Mart’s president and chief executive, said that he expects continued strong growth from its international business this year but that US sales will be more challenging in the first quarter.
Wal-Mart’s US division had a 0.5 percent decline in total sales to $70.97 billion in the quarter; Sam’s Club sales increased 3.8 percent to $12.28 billion. The company’s international business enjoyed a 19.5 percent gain to $29.57 billion.