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Wal-Mart CEO feeling good about second half '04

BENTONVILLE, Ark. — Although Wal-Mart remains concerned about the impact of high gas prices on consumer spending, its CEO predicted this morning that growth in employment and real income will lessen the impact.

"I started the year optimistic, and I still feel that way," said Lee Scott, president and CEO, Wal-Mart Stores Inc. Speaking in pre-recorded call to review second quarter performance, he added, "The initial response to the back-to-school season bodes will for the second half of the year."

Helped by stronger sales and leaner inventories, second quarter profits at Wal-Mart Stores Inc., the world's largest retailer, rose by 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 up an impressive 16.1 percent, to $2.7 billion from $2.1 billion.

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

Overall sales in Wal-Mart stores rose by 10.2 percent, to $46.9 billion from $42.6 billion last year, fueled by continued expansion. Total sales at SAM'S rose by 10.1 percent, to $9.4 billion from $8.6 billion, driven almost entirely by rapid same-store sales growth.

Opening doors across the globe at a rapid pace to offset a maturing U.S. discount store business, Wal-Mart grew its international business by 16.3 percent, to $13.4 billion from $11.5 billion last year.

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