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4% Boost In Profit Lifts Wal-Mart's Forecast For Year

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By MARCUS KABEL, The Associated Press

Published: February 20, 2008

Defying the gloom that many retailers are feeling, Wal-Mart Stores Inc. expects a more profitable year selling to penny-pinching shoppers after its renewed focus on low prices paid off during the holidays with a 4 percent rise in fourth-quarter profit.

The world's largest retailer, emerging from a yearlong turnaround effort after sales stumbles in 2005 and 2006, said Tuesday that aggressive holiday discounts and improvements in its more than 4,000 U.S. stores boosted sales despite consumer worries.

"No one has a crystal ball to look into the economic future, but we know the economy will be a critical factor this year," chief executive Lee Scott said after releasing results.

Wal-Mart forecast earnings per share for the current fiscal year that ends next Jan. 31 of $3.30 to $3.43, or growth between 4.4 percent and 8.5 percent compared with just more than 8 percent in fiscal 2008. The analyst consensus for full-year EPS was $3.43, according to Thomson Financial.

Wal-Mart shares rose 22 cents to $49.66, still near the top of their 52-week range of $42.09 to $51.48.

Analysts said Wal-Mart has several unique factors, including the scale of its grocery business, that can bring in traffic for other areas of the store, so that its optimism for the year ahead is not necessarily an indicator for the broader retail sector.

"If I was grading them, I would give Wal-Mart a 'B'. Unfortunately, the rest of retail is getting a 'C-minus'. So, on the bell curve they look like a shining example," said Patricia Edwards from investment manager Wentworth Hauser and Violich, which has about 400,000 Wal-Mart shares.

Wal-Mart said net profit in the quarter ended Jan. 31 rose to $4.096 billion, or $1.02 per share, from $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 percent growth at U.S. Wal-Mart stores.

Stores in 13 countries outside the United States accounted for about 25 percent of total company sales in the quarter, up from 23 percent a year earlier.

Fourth-quarter profit included a charge of 3 cents per share for dropped real estate projects and restructuring its Japanese operation as well as a 1 cent per share gain from real estate sales. Minus the charges, earnings would have been $1.04 per share.

Analysts had expected profit of $1.02 per share on revenue of $106.9 billion.

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

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