Wal-Mart says 2Q profit up 17 pct, raises outlook
Thursday August 14, 9:36 am ET
By Anne D'Innocenzio, AP Business Writer
Wal-Mart's 2nd-quarter profit rises 17 percent as it attracts financially squeezed shoppers
NEW YORK (AP) -- Wal-Mart Stores Inc. posted a 17 percent increase in second-quarter profit Thursday and raised its full-year earnings forecast, helped by cost cuts and a renewed focus on low prices that is attracting financially squeezed shoppers around the world.
But the world's largest retailer predicted slower sales growth at its established stores for the current quarter, saying it is seeing some volatility as customers find it difficult to stretch their paycheck to the next payday.
The Bentonville, Ark.-based retailer said it earned $3.45 billion, or 87 cents per share, in the quarter ended July 31, up from $2.95 billion, or 72 cents per share, a year earlier.
Profit from continuing operations came to $3.39 billion, up 9.3 percent from $3.09 billion last year. That year's second quarter included a benefit of 4 cents per share from several one-time items.
Net sales rose 10 percent to $101.6 billion in the second quarter from $92 billion in the year-ago period. Analysts polled by Thomson Reuters expected $101.9 billion.
For the quarter, the discounter posted a solid same-store sales gain of 4.5 percent, compared to a 1.9 percent increase a year earlier. The results exclude fuel sales. Same-store sales, or sales at stores opened at least a year, are considered a key indicator of a retailer's health.
"We have improved customer traffic and ticket and overall sales growth in our markets," President and Chief Executive Lee Scott said in a statement. "While inflation and higher fuel costs are pressuring suppliers, retailers and customers worldwide, we're confident that Wal-Mart is well positioned for this economy."
The company boosted its full-year forecast Thursday to a range of $3.43 to $3.50 per share, citing strict inventory controls and other cost-cutting measures. That's up from a full-year forecast issued in February of $3.30 to $3.43.
Second-quarter sales were driven particularly by the international business, which is seeing more customers as the U.S. economic woes spread to other areas of the world. Its international sales rose 19.3 percent to $25.3 billion, helped by such countries as Canada, China, and Brazil. Scott told investors during a pre-recorded call Thursday that executives in international divisions say they're noticing more financial stress on their customers. In Puerto Rico, for example, shoppers are eating more sandwiches.
At Wal-Mart's U.S. stores, sales rose almost 8 percent to $64.1 billion, while the Sam's Club warehouse store division posted a 7.8 percent sales gain to $12.28 billion.
The report shows that Wal-Mart's multiyear campaign to overhaul its strategy -- refocusing on low prices, improving the mix of merchandise offered, cleaning up its stores and providing friendlier and faster customer service -- is paying off.
With such changes, Wal-Mart reiterated Thursday that it is taking market share away from its competitors. The company has said that it expects to keep its new customers even when the economy improves.
Its shares have responded as well, now trading about $57 each -- near the high end of its 52-week range of $42.09 to $61.00, while shares of rivals like Target Corp. are in the doldrums.
But Wal-Mart reemphasized Thursday that the economy remains challenging, noting that shoppers are increasingly unable to stretch their paycheck to the next payday.
"We still see sales volatility around paycheck cycles," said Chief Financial Officer Tom Schoewe. He was referring to the pullback in spending in the days before the paycheck arrives and the spike after payday when shoppers have the cash to buy.
Wal-Mart predicts same-store sales growth to slow to 1 percent to 2 percent for the third quarter, a sharp decline from the 4.5 percent it saw in the second quarter.
Thursday August 14, 9:36 am ET
By Anne D'Innocenzio, AP Business Writer
Wal-Mart's 2nd-quarter profit rises 17 percent as it attracts financially squeezed shoppers
NEW YORK (AP) -- Wal-Mart Stores Inc. posted a 17 percent increase in second-quarter profit Thursday and raised its full-year earnings forecast, helped by cost cuts and a renewed focus on low prices that is attracting financially squeezed shoppers around the world.
But the world's largest retailer predicted slower sales growth at its established stores for the current quarter, saying it is seeing some volatility as customers find it difficult to stretch their paycheck to the next payday.
The Bentonville, Ark.-based retailer said it earned $3.45 billion, or 87 cents per share, in the quarter ended July 31, up from $2.95 billion, or 72 cents per share, a year earlier.
Profit from continuing operations came to $3.39 billion, up 9.3 percent from $3.09 billion last year. That year's second quarter included a benefit of 4 cents per share from several one-time items.
Net sales rose 10 percent to $101.6 billion in the second quarter from $92 billion in the year-ago period. Analysts polled by Thomson Reuters expected $101.9 billion.
For the quarter, the discounter posted a solid same-store sales gain of 4.5 percent, compared to a 1.9 percent increase a year earlier. The results exclude fuel sales. Same-store sales, or sales at stores opened at least a year, are considered a key indicator of a retailer's health.
"We have improved customer traffic and ticket and overall sales growth in our markets," President and Chief Executive Lee Scott said in a statement. "While inflation and higher fuel costs are pressuring suppliers, retailers and customers worldwide, we're confident that Wal-Mart is well positioned for this economy."
The company boosted its full-year forecast Thursday to a range of $3.43 to $3.50 per share, citing strict inventory controls and other cost-cutting measures. That's up from a full-year forecast issued in February of $3.30 to $3.43.
Second-quarter sales were driven particularly by the international business, which is seeing more customers as the U.S. economic woes spread to other areas of the world. Its international sales rose 19.3 percent to $25.3 billion, helped by such countries as Canada, China, and Brazil. Scott told investors during a pre-recorded call Thursday that executives in international divisions say they're noticing more financial stress on their customers. In Puerto Rico, for example, shoppers are eating more sandwiches.
At Wal-Mart's U.S. stores, sales rose almost 8 percent to $64.1 billion, while the Sam's Club warehouse store division posted a 7.8 percent sales gain to $12.28 billion.
The report shows that Wal-Mart's multiyear campaign to overhaul its strategy -- refocusing on low prices, improving the mix of merchandise offered, cleaning up its stores and providing friendlier and faster customer service -- is paying off.
With such changes, Wal-Mart reiterated Thursday that it is taking market share away from its competitors. The company has said that it expects to keep its new customers even when the economy improves.
Its shares have responded as well, now trading about $57 each -- near the high end of its 52-week range of $42.09 to $61.00, while shares of rivals like Target Corp. are in the doldrums.
But Wal-Mart reemphasized Thursday that the economy remains challenging, noting that shoppers are increasingly unable to stretch their paycheck to the next payday.
"We still see sales volatility around paycheck cycles," said Chief Financial Officer Tom Schoewe. He was referring to the pullback in spending in the days before the paycheck arrives and the spike after payday when shoppers have the cash to buy.
Wal-Mart predicts same-store sales growth to slow to 1 percent to 2 percent for the third quarter, a sharp decline from the 4.5 percent it saw in the second quarter.