Wal-Mart Earnings on Target

Total sales rise 12.2% in the fourth quarter from a year ago.
By Meredith Derby ,

Updated from 7:28 a.m. EST

Retail giant

Wal-Mart

(WMT) - Get Report

posted higher fourth-quarter earnings Thursday that were in line with both the company's and analysts' projections.

The company also forecast first-quarter and full-year 2004 earnings within range to above analysts' estimates, helping send its shares up 75 cents, or 1.3%, at $57.95 in premarket trading.

Net profit in the quarter ended Jan. 31 was $2.72 billion, or 63 cents a share, compared with $2.51 billion, or 57 cents a share, in the year-earlier period. Analysts had been calling for 63 cents a share, according to Thomson One Analytics.

The company noted that due to a new tax legislation in Germany, it reviewed its deferred tax asset for recoverability and recorded a valuation allowance of $150 million, which reduced earnings per share by 3 cents.

Total revenue in the quarter was $74.5 billion, up 12.2% from the prior year and in line with estimates. Total sales at Wal-Mart stores alone were up 11.3% to $50.6 billion. Sam's Club revenue rose 9.5% to $9.6 billion. The company said same-stores sales rose 4.8%.

In the first quarter, Wal-Mart sees earnings of 48 cents to 50 cents a share and said same-store sales are currently tracking toward the high end of its 3% to 5% growth range. Analysts surveyed by Thomson One Analysts forecast 48 cents a share, on average.

The company said food sales rose 26% and food same-store sales increased in the double digits.

Total operating profit, which is earnings before interest, unallocated corporate expenses and income taxes, rose 8.3% to $3.88 billion. Sam's Club operating profit jumped 17.1% to $343 million, and the company's international segment operating profit rose 15.2% to $862 million.

One of Wal-Mart's weaker segments in the quarter was apparel. As a result, the company had higher than normal markdowns in that unit but said in a recorded call that inventories are currently "in good shape."

The company also said sales in January were "excellent" which "helped us have the kind of quarter we had." Wal-Mart noted that gross margins were better than forecast because of the mix of merchandise it offered.

Wal-Mart said it is better positioned in the first of 2004 than it was in the first half of 2003. The company is "more optimistic than we have been in several years ? we are encouraged about consumer spending." Wal-Mart cited improvements in jobs and increased tax relief spending.

In full-year 2004, the company anticipates a profit of $2.34 to $2.38 a share, which is ahead of analysts' forecast for $2.32 a share.

Loading ...