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4Q Profits Improve at Wal-Mart

Bentonville, Ark. — Helped by stronger sales and continued expansion, fourth quarter profits at Wal-Mart Stores Inc. improved 16.2 percent, to $3.2 billion from $2.7 billion last year, modestly exceeding Wall Street expectations.

Earnings per share came in at $0.75, slightly ahead of a consensus forecast of $0.74.

Sales at the world's largest retailer, driven by continued worldwide expansion, climbed 10.4 percent, to $82.2 billion from $74.5 billion last year. But the crucial gauge of same-store sales rose at a sluggish pace of 1.5 percent during the all-important Christmas quarter, as consumers did their Christmas shopping elsewhere.

Same-store sales were strongest at SAM's Club, rising 2 percent, and were weak in the core Wal-Mart Stores, edging up just 1.4 percent.

Average gross margin improved by 70 basis points, or seven-tenths of a percentage point, to 22.5 percent from 21.8 percent a year ago. But gains there were largely offset by rising costs, which climbed by 60 basis points, or six-tenths of a percentage point, to 17 percent of sales from 16.4 percent a year ago.

Acting as a drag on the bottom line, interest expense shot up by almost a half during the closing quarter, by 47.8 percent, to $297 million from $201 million a year ago.

Wal-Mart Stores Inc.

Qtr. 1/31 (x000) 2004 2003 %change
a-Net sales, excluding $802 million in miscellaneous income, compared with $696 million last year. For the 12 months, miscellaneous income totaled $3 billion versus $2.4 billion.
b-Earnings for the 12 months of 2003 include $193 million in income from a discontinued operation.
Sales $82,216,000a $74,494,000a 10.4
Oper. Income (EBIT) 5,298,000 4,746,000 11.6
Net income 3,164,000 2,722,000 16.2
Per share (diluted) 0.75 0.63 19.0
Average gross margin 22.5% 21.8%
SG&A expenses 17.0% 16.4%
12 months
Sales 285,222,000a 256,329,000a 11.3
Oper. Income (EBIT) 17,091,000 15,025,000 13.8
Net income 10,267,000 9,054,000b 13.4
Per share (diluted) 2.41 2.07 16.4
Average gross margin 22.9% 22.5%
SG&A expenses 18.0% 17.5%


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