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Sam's Club sales help Wal-Mart

Don Hogsett -- Home Textiles Today, February 23, 2004

Helped by an earnings turnaround at its Sam's Club unit, and continued growth abroad, Wal-Mart Stores Inc. recorded a fourth-quarter profit of $2.7 billion, up 8.5 percent from $2.5 billion last year.

Sales at the world's largest retailer — also the world's largest public company — climbed at a double-digit pace, rising by 12.1 percent, to $74.5 billion from $66.4 billion last year, with international expansion still the company's fastest-growing segment.

Sales in U.S. stores grew by 11.3 percent, to $50.6 billion from $45.5 billion last year, a relatively subdued pace compared with the 25 and 30 percent increases the company was putting up a few years ago. Picking up some of the slack was the retailer's international operation, where sales grew almost twice as fast, rising by 17.3 percent, to $14.3 billion from $12.2 billion last year. Sam's Clubs grew by 9.5 percent, to $9.6 billion from $8.7 billion.

Same-store U.S. sales rose 4.8 percent, with a revitalized Sam's Club outpacing growth in core Wal-Mart stores. Sam's grew its comps by 6.7 percent, compared with the 4.4 percent pace at Wal-Mart.

Even more importantly, Sam's grew its operating profits at a faster pace than any of Wal-Mart's other segments — up 17.1 percent, to $343 million from $293 million last year. Growing almost twice as fast as the U.S. stores, operating profits in the international segment grew by 15.2 percent, to $862 million from $748 million a year ago.

With the rate of growth decelerating in the United States as the format matures here, operating profits in the core U.S. Wal-Mart franchise grew by 8.3 percent, to $3.9 billion from $3.6 billion the preceding year.

Wal-Mart Stores Inc.

Qtr. 1/31 (x000) 2003 2002 % chg
a-Fourth-quarter results include $696 million in miscellaneous income, up 37.8 percent from $505 million last year; $54 million in interest income, up 68.8 percent from $32 million last year; and $82 million in income from the company's minority interest in a joint venture, up 28.1 percent from $64 million last year. Prior-year results include $56 million in income from the McLane Co. subsidiary, sold in May 2003 to Berkshire Hathaway Inc.
b-12-month results include $2.4 billion in miscellaneous income, up 19.9 percent from a year ago; $164 million in interest income, up 24.2 percent from $132 million last year; $214 million in income from a minority interest in a joint venture, up 10.9 percent from $193 million in 2002; and $193 million in income form the discontinued McLane operation, up 40.9 percent from $137 million last year.
Sales $74,494,000 $66,400,000 12.2
Oper. income (EBIT) 4,050,000 3,602,000 12.4
Net income 2,722,000a 2,508,000a 8.5
Per share (diluted) 0.63 0.57 10.5
Average gross margin 21.8% 21.7%
SG&A expenses 16.4% 16.3%
12 months 2003 2002 % chg
Sales 256,329,000 229,616,000 11.6
Oper. income (EBIT) 12,673,000 11,334,000 11.8
Net income 9,054,000b 7,955,000b 13.8
Per share (diluted) 2.07 1.79 15.6
Average gross margin 22.5% 22.3%
SG&A expenses 17.5% 17.4%


Fourth quarter segment results

Wal-Mart 2003 2002 % change
Sales $50,646,000 $45,489,000 11.3
Oper. income 3,880,000 3,584,000 8.3
Sam's Club 2003 2002 % change
Sales 9,555,000 8,726,000 9.5
Oper. income 343,000 293,000 17.1
International 2003 2002 % change
Sales 14,293,000 12,185,000 17.3
Oper. income 862,000 748,000 15.2


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