"Wal-Mart Stores Inc., the world’s largest retailer, reported a 3.6 percent gain in second-quarter profit as growth abroad helped make up for sales declines in the U.S.. The company boosted its profit forecast for the year.
Net income advanced to $3.6 billion, or 97 cents a share, meeting the average of estimates compiled by Bloomberg. Profit will be as much as $4.05 a share for the year, compared with an earlier top range of $4, the Bentonville, Arkansas-based company said today in a statement.
Sales abroad rose 7.3 percent on a constant currency basis as the retailer’s expansion in Mexico, China and Brazil helped counter the 1.8 percent sales drop at U.S. Wal-Mart stores open at least a year. Chief Executive Officer Mike Duke has cut prices on cereal, detergent and other items to lure U.S. consumers, struggling to recover from the worst recession since the 1930s.
“A weak economy makes people think about shopping at Wal- Mart, so the tough economy is probably good for them,” Stifel Nicolaus & Co. analyst David Schick said in a telephone interview. The price reductions, he said, show that “Wal-Mart is working to rediscover its roots and simplify the business.” The Baltimore-based analyst recommends holding the shares.
Revenue in the three months ended July 31 advanced 2.8 percent to $103.7 billion. Analysts on average projected $105.5 billion. Wal-Mart forecast third-quarter profit of 87 cents to 91 cents a share, compared with the 91-cent average of estimates compiled by Bloomberg.
Stock Performance
Wal-Mart rose as much as 48 cents to $50.89 in early trading before the opening of the New York Stock Exchange after closing at $50.41 yesterday. The shares had declined 5.7 percent this year before today.
In July, sales at U.S. retailers rose less than economists projected, signaling restrained spending and consumer confidence until companies start hiring again. After boosting payrolls by 200,000 workers on average in March and April, companies scaled back the pace of hiring to an average 51,000 over the past three months.
Gross domestic product will expand at an average 2.55 percent annual rate in the last six months of 2010, according to the median of 67 estimates in a Bloomberg survey taken July 31 to Aug. 9, down from the 2.8 percent pace projected last month.
Wal-Mart rival Target Corp. is scheduled to report results tomorrow. Both are seeking a bigger chunk of back-to-school spending, the second-biggest sales period in the U.S. after the winter holidays. "
(Bloomberg)
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