NEW YORK (CNN/Money) -
Wal-Mart Stores Inc. posted a gain in fiscal first-quarter earnings that edged past Wall Street estimates Thursday, with the company setting its full-year earnings target higher despite concern about the effect of high gas prices on sales.
The world's largest retailer earned $2.2 billion, or 50 cents a share, from continuing operations in the period ended April 30, up from $1.8 billion, or 41 cents a share, a year earlier. Analysts surveyed by earnings tracker First Call had a consensus forecast of 49 cents a share.
CEO Lee Scott said that the improving economy and increased demand for apparel is helping the results.
Shares of Wal-Mart (WMT: Research, Estimates), a component of the Dow Jones industrial average, rose 54 cents to $55.60 in pre-market trading on Instinet Thursday.
"Although I remain concerned about the impact higher gasoline and petroleum prices will have on our customers, I am still optimistic about the balance of the year," said Scott in a prepared statement. He also said in a pre-recorded call that increased oil, health care costs and workers compensation hurt the company's results by raising expenses.
"We're concerned a lot about the high gasoline prices which is taking about $7 a week out of our consumers' spending income," Scott said.
Chief Financial Officer Tom Schoewe said the company now expects fiscal second-quarter earnings per share of 60 to 62 cents a share, up from 52 cents a year earlier, while full-year EPS should be $2.35 to $2.39, which is 1 cent better than its earlier full-year guidance and up from $2.03 in 2003.
The guidance for both periods is roughly in line with analysts' forecasts. First Call's second-quarter consensus EPS estimate stands at 60 cents, with a range of forecasts from 58 to 61 cents a share. The full-year EPS forecast is $2.37, with estimates ranging from $2.33 to $2.42.
At least one analyst classified Wal-Mart's results and bullish guidance for the year as "very good news" for the company and a very strong signal for the industry overall.
"Despite higher gasoline prices, Wal-Mart was able to raise guidance for the second-quarter which is particularly noteworthy because that's also the period that they will have to deal with the lion's share of the gas impact," said Bill Dreher, analyst with Deutsche Bank Securities.
"If Wal-Mart keeps this momentum, we think the company's same-store sales growth will be between 4 to 6 percent for the year," he said. "We also believe Wal-Mart is on track to meet or surpass estimates for the remainder of the year. If that happens, we expect Wal-Mart shares to break out of theirtrading range which they've been in for about four years."
Dreher has a "buy" rating on Wal-Mart.
Sales at the company rose 14.2 percent to $64.8 billion, topping First Call's forecast of $64.3 billion. Sales at U.S. stores open at least a year, a closely watched retail measure known as same-store sales, were up 6.4 percent for the quarter.
Wal-Mart said it expects second quarter same-store sales to be up in the 4 to 6 percent range.
Among the better-performing product categories, Scott said apparel sales saw improvement for the first time, "after two very difficult quarters."
Scott also addressed the recent defeat of Wal-Mart's plan to build a supercenter in Inglewood, Calif. saying that "there were things that we could have done better." At the same time, Scott said the setback would not dent the retailer's expansion going forward. "We expect to reach our targeted growth rate. We don't want people to get influenced by single-issue losses," he said in the pre-recorded call.
Shares of Wal-Mart (WMT: Research, Estimates), a component of the Dow Jones industrial average, gained 53 cents to $55.06 in Wednesday trading.