Wal-Mart Stores Inc. posted a better-than-expected 11.5 percent rise in quarterly profit on Tuesday, helped by strength in its international business, and said deep discounts would drive holiday sales.
The world’s biggest retailer, whose shares edged higher on the news, gave a fourth-quarter profit forecast that was at or below Wall Street expectations, but said recent price cuts on items such as toys and electronics were already drawing shoppers.
Net income rose to $2.65 billion, or 63 cents per share, in the third quarter that ended October 31, from $2.37 billion, or 57 cents per share, a year earlier.
Results in the latest period include a 1-cent-per-share insurance gain related to last year’s hurricanes.
Analysts, on average, expected earnings of 60 cents per share, according to Reuters Estimates. Wal-Mart said on October 5 that profit would probably be in the range of 59 cents to 63 cents per share.
Sales rose 12 percent to $83.54 billion, with international sales up nearly 34 percent, helped by acquisitions.
Wal-Mart posted lackluster sales growth at its U.S. stores open at least a year, hurt by disruptions from store remodeling efforts and a poor reception for its trendier clothing.
“Although sales in the U.S. were softer than we hoped for in the third quarter, there are real opportunities in the fourth quarter to build on the momentum of the aggressive pricing strategy we have implemented in our stores for the holiday season,” Chief Executive Lee Scott said in a statement.
“This season, no one will doubt Wal-Mart’s leadership on price and value,” he said.
The retailer forecast fourth-quarter earnings from continuing operations at 88 cents to 92 cents a share. Analysts on average expected 92 cents, according to Reuters Estimates.
On a recorded message detailing its third-quarter results and fourth-quarter plans, Scott said specials such as a $398 laptop computer sold out quickly, and he vowed the “most aggressive pricing strategy ever” for the holiday season.
The retailer expects fourth-quarter sales at its U.S. stores open at least a year to be up 1 percent to 2 percent. Wal-Mart had previously forecast flat same-store sales for November, so the quarterly forecast suggests stronger growth in December and January.
In the third quarter, the U.S. discount stores posted 7.8 percent sales growth, with operating income up 9.9 percent.
Sam’s Club sales were up just 1.9 percent, hurt by falling prices for gasoline sold at its filling stations, while operating income rose 4.1 percent.
The international division posted an 18.1 percent jump in operating income for the quarter.