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Wal-Mart beats Street
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February 16, 1999: 8:03 p.m. ET
4Q earnings leap 21 percent on strength at home and overseas
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NEW YORK (CNNfn) - Wal-Mart Stores Inc. said Tuesday its earnings jumped 21 percent in the fourth quarter, beating Wall Street forecasts on solid results at home and abroad.
The results, another record for the world's largest retailer, were fueled by strong sales gains and new store openings.
Donald Spindel, retail analyst at A.G. Edwards, commented, "The have just had an unbelievable year. They continue to do so many things right. They are executing just superbly."
Wal-Mart (WMT) said net income rose to $1.56 billion, or 70 cents per share, in its fiscal fourth quarter, ended Jan. 31, from $1.29 billion, or 57 cents per share, a year earlier. Wall Street had been expecting 67 cents a share for the latest quarter, according to First Call Corp., which tracks analysts' estimates.
"The economy certainly played a major role in Wal-Mart's successes this past year but even if you factor the economy out of the equation -- when you look at how well Wal-Mart is doing relative to its competition and how much market share it continues to gain -- you really have to attribute their success not only to the economy but just to doing a lot of the little things right," Spindel said.
Sales rose 15 percent to $40.79 billion from $35.39 billion.
The Bentonville, Ark.-based retailer said pre-tax profit at its core Wal-Mart division rose 14 percent in the quarter, while profit at stores outside the United States jumped 33 percent. Profit before taxes at its Sam's Club membership warehouse stores rose 8 percent.
The retailer had more than 3,000 stores in the United States and Canada and another 562 in other countries at the end of its fiscal year.
The company's CEO sees vast potential for further growth. David Glass, appearing Tuesday on CNN's "Moneyline News Hour with Lou Dobbs," said, "We see lots of opportunity domestically. ... All of our divisions exceeded plans. So when you're hitting all cylinders, it's a lot easier to keep the momentum going. … There's no shortage of opportunity if we're good enough to execute."
For the full year, Wal-Mart's net income rose 25.6 percent to $4.43 billion, or $1.98 per share, as sales increased 16.7 percent to $137.63 billion.
"Wal-Mart continues to focus on their everyday low pricing strategy, customer service and I think a couple of years ago they started to focus on return on investment and a big part of that program was looking at their inventory levels, bringing them down, and … that has enabled them to significantly help their gross margins," Spindel concluded.
Internet retailers beware
While Wal-Mart has covered the United States with its stores, the retail giant has ventured online to test the waters of e-commerce. Glass told "Moneyline" that while he expects Wal-Mart stores to continue to dominate the company's sales, Internet retailing is "an exciting area that we believe we're positioning ourselves well to serve in the future" and that Internet shopping "from a convenience … and cost standpoint will be very important."
Wal-Mart shares soared 3-3/16 to close at 87-9/16 Tuesday, bringing the company's stock value to $194 billion, almost double what it was a year ago, and five times the combined market values of J.C. Penney, Sears and Kmart.
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Wal - Mart Stores
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