Even if the economy is slowing down, there's no sign it's affecting Wal-Mart ( WMT). The nation's biggest retailer posted stronger-than-expected second-quarter earnings Tuesday, even as sales came up slightly short of targets. At the same time, the retail giant raised its earnings forecast for the third quarter and maintained guidance for the year. Wal-Mart's solid results offered a tonic to retail investors made anxious by a series of shortfalls in the apparel and electronics sectors. Still, some observers point out that with its low-priced offerings and tight rein on costs, Wal-Mart is practically the last company you'd expect to be hit by the much-discussed prospect of a so-called double-dip recession. Wal-Mart shares, off about 15% on the year amid worries about the company's premium valuation, were up lately 57 cents at $48.98.
Wal-Mart, based in Bentonville, Ark., reported revenue of $59.7 billion, a 13% jump from a year ago, and earnings of 46 cents a share, up 28% from the year-ago period. On average, analysts had been projecting earnings of 45 cents a share and revenue of $60 billion. The company said it expects earnings of 40 cents to 41 cents a share in the third quarter; analysts had been projecting 39 cents a share. Wal-Mart slightly lowered its same-store sales projections for the remainder of the year, to 4%-6% from 5%-7%, but kept its earnings forecast of $1.76 to $1.78 per share for the year. The company said the performance of its international division was particularly strong. International sales rose 16% to $9.7 billion, with the strongest performance from Canada, Mexico and the U.K.
Wal-Mart consistently meets or exceeds its earnings target, so Tuesday's news was no surprise. The company's report comes at the beginning of retail earnings season, and at a time when Wall Street has become increasingly skeptical of a second-half turn in retail sales, as many had been projecting all summer. Several earnings warnings lately from the likes of Hot Topic ( HOTT) and Best Buy ( BBY) and a drop in consumer confidence in July have fanned fears of a consumer spending slowdown. And while many investors look to Wal-Mart to give an indication of the direction of the consumer economy, a solid earnings report from the company doesn't mean other chains will post similar results. Increasingly, Wal-Mart's success comes at the expense of other outlets, observers say. For example, among the 39 largest retailers tracked by Thomson Financial/First Call, same-store sales rose 2.6%. But strip out Wal-Mart and the gains of all the rest were just 1.5%. And while electronics giant Best Buy reported a large earnings warning recently, Wal-Mart said that electronics were among its best-performing categories recently.