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Wal-Mart: Another solid performance

Helped by strong sales and lean inventories, second quarter profits at Wal-Mart Stores Inc., the world's largest retailer, rose 8.5 percent, to $2.7 billion from $2.4 billion last year.

Skewing the year-over-year earnings comparison substantially, last year's bottom line included $161 million in profits from a discontinued operation — the McLane Company distribution subsidiary. Pulling McLane out of the comparison, second quarter profits from continuing operations jumped an impressive 16.1 percent, to $2.7 billion from $2.1 billion.

Helped by growth abroad and strength at Sam's Club, sales increased at a double-digit pace, rising 11.3 percent, to $69.7 billion from $62.6 billion. Same-store sales in the United States rose 4.1 percent, with strong comps at Sam's offsetting softness in the core Wal-Mart Stores. Same-store sales at Sam's rose 8.8 percent, while comps at Wal-Mart stores edged up just 3.2 percent.

Overall sales in Wal-Mart stores rose 10.2 percent, to $46.9 billion, fueled by continued expansion. Total sales at Sam's rose 10.1 percent, to $9.4 billion from $8.6 billion, driven almost entirely by rapid same-store sales growth.

Wal-Mart Stores Inc.

Qtr. 7/31 (x000) 2004 2003 % chg
Sales $69,722,000 $62,637,000 11.3
Oper. Income (EBIT) 4,404,000 3,792,000 16.1
Net income 2,651,000a 2,444,000a 8.5
Per share (diluted) 0.62 0.56 10.7
Average gross margin 23.2% 22.9% --
SG&A expenses 18.0% 17.8% --
Six months 2004 2003 % chg
Sales 134,485,000 119,354,000 12.7
Oper. Income (EBIT) 8,008,000 6,879,000 16.4
Net income 4,817,000b 4,305,000b 11.9
Per share (diluted) 1.12 0.98 14.3
Average gross margin 23.0% 22.7% --
SG&A expenses 18.1% 17.9% --
a-Second quarter results include a $56 million loss from the company's share in a joint venture, compared with a prior-year deficit of $41 million. Results in the prior-year quarter include $161 million in earnings from a discontinued operation, McLane Co., since sold off.
b-Six-month results include a $98 million loss from the company's share of a joint venture, compared with a year-before loss of $83 million. Results in the year-before first half include $193 million in earnings from a discontinued operation, McLane Co., since sold off.


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