Wal-Mart posts record profit

New York - Wal-Mart Stores, the world's biggest retailer, has reported record quarterly earnings and sales but sounded a cautious note on the weak US economy.

The global discounter rang up a record $3.022 billion net income for the fiscal 2009 first quarter ended April 30, an increase of 6.9% from the same period in 2008.

Earnings per share (EPS) of 76 cents slightly topped analysts' consensus forecast of 75 cents.

First-quarter net sales jumped 10.2% to $94.1 billion, also a record high for the Bentonville, Arkansas-based low-price retail behemoth.

"We continue to deliver against the business model that (founder) Sam Walton started - selling branded merchandise for less. Our business is even more relevant to our customers today, given the current economic pressures," said Lee Scott, Wal-Mart president and chief executive.

"We continue to make progress in delivering on our mission of saving people money so they can live better," Scott added.

Driving growth

Wal-Mart, known for its big-box discount stores, said worldwide sales growth was driven by price leadership, customer service and operational improvements, "even in light of economic headwinds caused by higher energy costs and food inflation".

Analysts said that Wal-Mart's cut-rate strategy has broader appeal in the current economic slump as falling home values, rising inflation and tighter credit force cash-strapped consumers to shop for bargains.

"While some retailers are being pinched by the current state of the US economy and rising fuel prices, Wal-Mart Stores is finding a bit of success by attracting bargain-hunting consumers," said Joseph Hargett at Schaeffer's Research.

International sales rocketed 22% higher, boosted in part by Asda, the number-two supermarket chain in Britain after Tesco.

The retailer claimed its "strong" same-store sales rise of 5% was due to an increase in customer traffic driven by lower prices and strong seasonal events.

It said Asda outperformed the market for the eighth consecutive quarter with market share up 0.3% year-on-year in the 12 weeks to April 20.

"Although we expect the UK to remain a challenging economy and retail market over the rest of the year, we believe that our strong pricing agenda, backed by a cost reduction program leaves us well positioned to continue to make market share there," said Mike Duke, Wal-Mart International vice chairman.

Difficult to quantify

First-quarter sales in Wal-Mart's home market were far less brisk: Wal-Mart brand stores registered a gain of 6.6%, while Sam's Club stores climbed 7.6%.

"For the second quarter of fiscal year 2009, we estimate the company's comparable-store sales increase in the United States to be between flat and 2%," said Tom Schoewe, Wal-Mart executive vice president and chief financial officer.

The impact on US sales from a federal 168-billion-dollar stimulus package to jump-start the economy, featuring tax rebates that began to be issued last month, is "currently difficult to quantify," Schoewe said.

Second-quarter earnings per share are expected to be between 78 cents and 81 cents, he said, a more conservative forecast than analysts' expectations of 81 cents.

Wal-Mart's stock, a component of the blue-chip Dow Jones Industrial Average, skidded 2.36% to close at $56.65 in New York.

Source: AFP

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