New York: Wal-Mart Stores, the world’s biggest retailer, reported record quarterly earnings and sales but sounded a cautious note on the weak U.S. economy.
The global discounter rang up a record $3.022 billion net income for fiscal 2009 Q1 ended April 30, an increase of 6.9% from the same period in 2008.
Earnings per share (EPS) of 76 cents slightly topped analysts’ consensus forecast of 75 cents. Q1 net sales jumped 10.2% to $94.1 billion, also a record high for the Bentonville, Arkansas-based low-price retail behemoth.
Wal-Mart, known for its big-box discount stores, said worldwide sales growth was driven by price leadership, customer service and operational improvements, “even in light of economic headwinds caused by higher energy costs and food inflation.”
Analysts said that Wal-Mart’s cut-rate strategy has broader appeal in the current economic slump as falling home values, rising inflation and tighter credit force cash-strapped consumers to shop for bargains.
“While some retailers are being pinched by the current state of the U.S. economy and rising fuel prices, Wal-Mart Stores is finding a bit of success by attracting bargain-hunting consumers,” said Joseph Hargett at Schaeffer’s Research.
International sales up 22%
International sales rocketed 22% higher, boosted in part by Asda, the number-two supermarket chain in Britain after Tesco.
The retailer claimed its “strong” same-store sales rise of 5% was due to an increase in customer traffic driven by lower prices and strong seasonal events.
“Although we expect UK to remain a challenging economy and retail market over rest of the year, we believe that our strong pricing agenda, backed by a cost reduction programme leaves us well positioned to continue to make market share there,” said Mike Duke, Wal-Mart International vice chairman.
Sales in home market sluggish
Q1sales in Wal-Mart’s home market were far less brisk: Wal-Mart brand stores registered a gain of 6.6%, while Sam’s Club stores climbed 7.6%. “For Q2 of fiscal year 2009, we estimate the company’s comparable-store sales increase in the U.S. to be between flat and 2%,” said Tom Schoewe, Wal-Mart executive vice president and CFO.
Q2 earnings per share are expected to be between 78 cents and 81 cents, he said, a more conservative forecast than analysts’ expectations of 81 cents. Wal-Mart’s stock, a component of the blue-chip Dow Jones Industrial Average, skidded 2.36% to close at $56.65 in New York.