Home ‘under pressure’ at Wal-Mart
May 13, 2008,
Bentonville, Ark. – As consumers turned their attention toward basic necessities, Wal-Mart Stores Inc. today reported solid sales and earnings gains for the first quarter, with earnings per share up nearly 12% to 76 cents.
Home remained a drag – a situation the company expects to continue in the foreseeable future. “The home business will continue to be under pressure by the weaker home climate,” said Eduardo Castro-Wright, president and ceo of U.S. stores, in pre-recorded remarks broadcast this morning.
Executives said Wal-Mart will focus on inventory control more than ever, the goal being to hold inventory increases to half of sales growth. During the first quarter, inventory came in more than $1 billion below plan and markdowns were reduced by 30 basis points, said Castro-Wright.
“Our inventory will continue to run very lean,” he said.
Castro-Wright said Wal-Mart’s shoppers began reducing the amount of purchases they put on credit card in the third quarter of 2007.
For the first quarter, total company profit came in at $3.0 billion, up 6.9%. Operating income for U.S. Wal-Marts rose 9.6% to $4.4 billion. At Sam’s Club, operating income was $386 million, up 4.3%, while the international division’s operating income climbed 15.6% to $1.0 billion.
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