|
Wal-Mart hits 4Q target
|
 |
February 19, 2002: 5:22 p.m. ET
Net income, revenue rise despite weak holiday retail season.
|
NEW YORK (CNN/Money) - Wal-Mart Stores Inc. posted a 9.5 percent increase in fourth-quarter profit Tuesday that met Wall Street estimates on stronger-than-forecast sales, as the world's biggest retailer continued to grab market share from competitors amid a down economy.
The company also said that even if there is no pickup in consumer spending overall, it should be able to meet or slightly exceed analysts' forecasts for its first quarter, as well as for its full fiscal year.
Wal-Mart, a Dow component, earned $2.19 billion, or 49 cents a share, excluding special items, in the period ended Jan. 31. That was in line with forecasts of analysts surveyed by earnings tracker First Call and up from $2 billion, or 45 cents a share, in the year-earlier period.
Sales of the Bentonville, Ark.-based company rose to $64.2 billion from $56.6 billion a year earlier. First Call's revenue forecast was $62.5 billion.
Wal-Mart stock slipped 74 cents to $59.29 Tuesday on investor jitters after the company said it did not meet full-year estimates.
For the year, the company posted earnings of $6.7 billion, or $1.49 a share, up 6 percent from $6.3 billion, or $1.40 a share.
Full-year sales increased 13.8 percent to $218 billion from $191 billion.
Wal-Mart, Target (TGT: Research, Estimates), and other discount chains have steadily benefited from their everyday low-price strategies in the last year as a sliding economy led increasingly cautious consumers to shift away from traditional department stores and specialty shops.
Though even Wal-Mart has been forced to cut prices more deeply than normal on some items because of the recession, it still maintains strong margins because of its favorable terms with vendors and highly efficient distribution systems.
Steadily increasing competition from Wal-Mart helped force Kmart Corp., the No. 2 U.S. discount chain with $37 billion in annual sales, into bankruptcy last month.
"Ever since the end of December, we've exceeded our internal sales plans. This is primarily a result of increased customer count, indicating we're gaining market share," Wal-Mart (WMT: Research, Estimates) Chief Financial Officer Thomas Schoewe told analysts during a conference call Tuesday. But he cautioned that "ticket growth and distribution of purchases does not yet signal acceleration in consumer spending."
Schoewe told analysts that the company expects first-quarter earnings of 35 cents or 36 cents a share, and that full fiscal-year earnings per share should be $1.74-to-$1.76. Analysts polled by First Call expect first-quarter earnings of 35 cents a share and full-year earnings of $1.74 a share.
"Although we did not attain our goal of increasing earnings at the same rate of sales, our 8.9 percent growth in earnings per share in the fourth quarter represents more than triple the growth rate experienced in the first six months of the year," Wal-Mart CEO Lee Scott said in a statement.
Bill Dreher, a retail analyst at Robertson Stephens, believes the company's projected first-quarter and full-year estimates are conservative because they assume no change in economic or competitive conditions.
"It's pretty well accepted that the economy is gradually building momentum, and Kmart has declared bankruptcy," Dreher said, adding that if Kmart follows through with plans to close 500-to-700 stores, Wal-Mart will likely add 4.5 cents a share to its 2002 earnings number.
Additionally, Dreher noted that Wal-Mart's only remaining serious competitor in the discount space is Target Corp. But Target's focus on "cheap chic," is a niche where Wal-Mart does not directly compete.
Check out retail stocks here
On Tuesday, Wal-Mart said sales at its core Wal-Mart stores and supercenters increased 15.3 percent in the quarter from a year ago to $40.9 billion. Operating profit jumped 12.8 percent in the period.
Sales at Sam's Club, its wholesale club division, increased 10.9 percent to $8.3 billion, and operating profit rose 1 percent. Wal-Mart International sales increased 7.4 percent with a 19.2 percent jump in operating profit.
As of Jan. 31, the company operated 2,713 Wal-Mart and supercenter stores, 500 Sam's Clubs, and 31 Neighborhood Markets in the United States. 
|
|
|
|
|
|
|
