Updated from 7:22 a.m. EDT
reported third-quarter earnings in line with Wall Street's expectations and sounded an upbeat note headed into its holiday season.
The world's largest retailer earned $2.4 billion, or 57 cents a share, in the quarter, including charges that netted out to $80 million, or 2 cents a share. Analysts were forecasting earnings of 57 cents a share in the quarter, according to Thomson First Call.
Charges included $40 million of costs incurred as a result of the three major hurricanes -- Katrina, Rita and Wilma -- and $69 million of expenses related to product-warranty programs, partially offset by $29 million of other income resulting from the Visa MasterCard antitrust litigation settlement.
Its 3.8% increase in profits from last year marked the company's slowest bottom-line growth in three years. Still, the news heartened Wall Street, since Wal-Mart shoppers are viewed as particularly susceptible to high gasoline prices and other economic forces that are threatening consumer spending. Its shares were recently up 34 cents, or 0.7%, to $49.34.
Wal-Mart chief executive Lee Scott noted that the results came in the face of the devastating impacts from the hurricanes that sent gas prices soaring and caused Wal-Mart to close hundreds of its stores. He said the results showed a "pretty good performance in a difficult environment."
The company guided fourth-quarter earnings to 82 cents to 86 cents a share, encompassing the Thomson First Call consensus of 84 cents a share.
"Even with the lingering impacts of the hurricanes, and the impact of higher energy prices, I believe we will have a good holiday season," Scott said on a recorded call.
Its third-quarter profit gains were driven mainly by sales increases. The company recorded revenue of $75.4 billion, up 10% from last year and about $150 million shy of Wall Street's estimates. For U.S. stores open at least a year, it posted an increase of 3.8%. In the Wal-Mart division, same-store sales were up 2.9%, and Sam's Club warehouse stores showed comps up 8.1%.
"On the macro side, some of the worry about gas inflation and consumer spending that always hovers over Wal-Mart should be measured by the fact that many of the same Wal-Mart shoppers that complain about higher gas and spend a bit less were never among the biggest spenders to begin with, so their impact upon total U.S. retail sales might not be as significant as it appears," said Richard Hastings, retail analyst with Bernard Sands.