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Wal-Mart Stores reports higher profit

Wal-Mart Stores Inc., the world’s largest retailer, said Tuesday its renewed focus on low prices paid off with a 4 percent rise in profit for its fourth quarter.
/ Source: The Associated Press

Wal-Mart Stores Inc., the world’s largest retailer, said Tuesday its renewed focus on low prices paid off with a 4 percent rise in profit for its fourth quarter as holiday shoppers brought discounted groceries and home electronics as well as health and wellness products.

International growth also helped boost profit and sales. Stores in 13 countries outside the U.S. accounted for about 25 percent of total company sales in the quarter, up from 23 percent a year earlier.

Wal-Mart said net income in the quarter ended Jan. 31 rose to $4.096 billion, or $1.02 per share, compared to $3.94 billion, or 95 cents a share, a year earlier.

Net sales grew 8.3 percent to $106.27 billion, helped by 18.8 percent international growth and 5.0 percent growth at U.S. Wal-Mart stores. Overall revenue including membership fees rose to $107.43 billion from $99.078 billion a year earlier.

Analysts surveyed by Thomson Financial had expected profit of $1.02 per share on revenue of $106.9 billion.

Wal-Mart forecast earnings per share for the 2009 fiscal year of $3.30 to $3.43. The range of 23 analyst estimates for the full year was $3.30 to $3.55, according to Thomson.

Chief Executive Lee Scott said Wal-Mart’s decision last year to refocus on low prices after a brief foray into fashion and trendier merchandise had paid off in a time of mounting economic uncertainty.

Wal-Mart also made progress on customer service, Scott said. He cited cleaner stores, fewer out-of-stock products and faster checkout lanes.

“The price leadership strategy we put in place at the beginning of the year was exactly the right strategy for our customers around the world in a tough economic environment,” Scott said.

Scott said Wal-Mart benefited from a strong holiday business after moving early last fall to discount groceries, toys and home electronics, including name-brand flat-screen televisions and computers. Health and wellness items also sold well, he said.

“We knew our customers would be stretched during the holidays and we made sure they knew that they could count on Wal-Mart for low prices,” Scott said.

Scott said the economy remains a critical issue for consumers this year.

“Customers were more cautious in their spending in January. In a volatile economy, I believe we are well positioned to succeed.”

Rising fuel costs are putting pressure on margins, said the head of Wal-Mart’s U.S. stores, Eduardo Castro-Wright. Diesel for Wal-Mart’s huge fleet of trucks rose about 25 percent a gallon last year and Castro-Wright called the issue a “potential headwind” for the year ahead.

Castro-Wright said Wal-Mart is introducing new clothing brands to revive its apparel business, which has lagged other areas of the store. New lines this year include kids’ brand Grranimals and more Hannah Montana products licensed from The Walt Disney Co.

For the full 2008 fiscal year ended Jan. 31, Wal-Mart earned $12.73 billion, or $3.13 a share, up from $11.28 billion, or $2.71 billion, a year earlier. Net sales rose 8.6 percent to $374.53 billion from $344.99 billion a year ago. Overall revenue rose to $378.80 billion from $348.65 billion a year ago.