Wal-Mart: Sales up, profits down

Wal-Mart reports quarterly sales of nearly $108 billion and earnings per share of 96 cents, excluding charges. Retail giant says it created more than 60,000 jobs in '08.

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By Aaron Smith, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Wal-Mart Stores reported Tuesday that fourth-quarter sales rose, while profit fell - both missing analyst estimates.

But the company's stock rose some 3.5% on the back of its strong cash position and surging sales.

Wal-Mart said sales had nearly reached $108 billion during the quarter, while earnings, excluding charges, reached 96 cents per share for the three months ended Jan. 31.

That compares with the prior year's quarter, when the world's biggest retailer reported net sales of $106.2 billion and earnings of $1.02 per share.

Analysts had expected Wal-Mart (WMT, Fortune 500) to report a 2% revenue gain to $109 billion, and a 5% decline in earnings to 99 cents per share, according to a consensus of analysts polled by Thomson Reuters.

Wal-Mart exceeded its own fourth-quarter estimate for a profit of between 91 cents to 94 cents per share.

The company said that net sales in the U.S. rose 6% in the fourth quarter to about $71.5 billion, offsetting the 8.4% decline in international sales to about $24.7 billion. The international sales were negatively affected by the strong U.S. dollar, the company said. Sam's Club sales were flat quarter-to-quarter, at about $11.8 billion.

"Wal-Mart recorded the strongest sales result in its history in the fourth quarter, with $108 billion in sales," said Mike Duke, chief executive of Wal-Mart Stores, in a press release.

Wal-Mart has continued to grow its bottom line as the recession grinds on, and consumers seek to stretch their dollars.

Analysts spoke favorably of the company's strong cash position, noting that its free cash flow of $11.6 billion for the full year will help it continue plans to buyback $15 billion worth of stock.

"Frankly, they're one of the few companies that's in a position to do a stock buy back," said Wayne Hood, analyst for BMO Capital Markets. "They're strong free cash flow allows them to be back in the market place."

Duke, who became CEO three weeks ago, said that Wal-Mart created 63,000 jobs in 2008, including more than 33,000 in the United States. Overall, the U.S. economy shed 2.6 million jobs in 2008.

Last month, Wal-Mart announced that it was trimming 800 jobs at its headquarters in Bentonville, Ark.

Wal-Mart employs some 1.4 million people in the United States and is the largest private-sector employer, according to its Web site.

In a recorded call, Wal-Mart Chief Executive Eduardo Castro-Wright said the company had managed to keep prices low compared to competitors and that prices grew at a slower pace than the nationwide rate of inflation.

Also in the recorded call, Duke said, "We will work even harder this year to save people money so they can live better. I do believe this is Wal-Mart's time." To top of page

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