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Wal-Mart beats, but warns
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November 9, 1999: 1:05 p.m. ET
World's No.1 retailer outpaces Street, but 4Q estimate disappoints investors
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NEW YORK (CNNfn) - Wal-Mart Stores Inc. beat Wall Street's third quarter earning estimates by a penny Tuesday, but the world's No. 1 retailer saw its shares fall on its fourth quarter forecasts.
The Bentonville, Ark.-based retailer, the nation's largest, had net income of $1.3 billion, or 29 cents a diluted share, in the three months ended Oct. 31, up from $1.0 billion, or 22 cents a share, a year earlier.
Analysts surveyed by First Call expected earnings of 28 cents. Net sales at the company were up 20.6 percent to $40.4 billion from $33.5 billion a year earlier.
But fiscal fourth-quarter forecasts from the company dampened investor enthusiasm. Wal-Mart said it sees fourth-quarter sales growth at stores open more than one year in the mid-single digits, and expects earnings per share in that quarter to range from 39 to 41 cents.
A consensus of analysts' estimates put Wal-Mart's fourth-quarter earnings per share at 41 cents, from a range of 39 to 43 cents a share, according to First Call/Thomson Financial.
Shares of Wal-Mart (WMT) were down 1-11/16 to 56-13/16 in early afternoon trading.
"The EPS target is 39 to 41 cents and right now the Street target is 41 cents, so you may be seeing softness in the stock based on that comment alone," said Daniel Binder, retail industry analyst at Brown Brothers Harriman.
Wal-Mart saw its best percentage growth outside the United States, where sales doubled to $5.9 billion for the quarter, while operating profits rose 17 percent to $369 million.
The recent acquisition of the Asda chain in Britain were included in results for the first time, and the company said that division exceeded its target and added to earnings per share.
"Comp (comparable) sales (for Asda during the third quarter) were up in the high-single digits, which far exceed the U.K. food industry growth rate," Wal-Mart President and Chief Executive David Glass told analysts and investors on a conference call. "Asda also exceeded its profit plan and was accretive for Wal-Mart for the two-month period."
Binder said Wal-Mart was in good shape heading into the holiday season, despite some lingering weather-related softness in apparel sales.
"They've done such a great job in terms of managing inventory that their exposure is a lot less than other retailers," Binder said. "America is well employed and the consumer continues to spend."
The company saw 14 percent growth in sales at its core Wal-Mart stores to $26.5 billion, along with an 18 percent gain in operating profit to $1.9 billion. At its discount/wholesale Sam's Club division, revenue was up 8 percent to $6 billion, while operating profit was up 9 percent to $187 million. Its McLane division sales rose 20 percent to $2.1 billion.
In October, Wal-Mart led all major retailers in the percentage gain in sales in stores open a year or more, posting a 6.2 percent gain. Same-store sales rose 8 percent in the first nine months of its fiscal year.
For the nine months, the company had net income of $3.7 billion, or 82 cents a diluted share, compared to $2.9 billion, or 64 cents a share, a year earlier. Net sales rose to $113.6 billion from $96.8 billion.
--from staff and wire reports
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