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Wal-Mart Still Strong

Helped by a double-digit rise in sales and strong operating profits in its warehouse clubs and international units, third quarter profits at Wal-Mart Stores Inc. edged up 3.8 percent, to $2.4 billion from $2.3 billion, despite a $109 million after-tax hit from hurricane damage and expenses tied to warranty programs.

Overall sales improved 10.1 percent, to $75.4 billion from $68.5 billion during the same period a year ago. Overall same-store sales improved 3.8 percent, helped by a strong boost from warehouse clubs. Same-store sales at the no-frills Sam's Club unit jumped up 8.1 percent, more than twice as high as the 2.9 percent increase at the core U.S. Wal-Mart business.

Taking a bite out of the bottom line, Wal-Mart said it took a one-time, after-tax charge of $40 million to cover the cost of damage from hurricanes Katrina, Rita and William. Putting further pressure on profits was $69 million in expenses tied to product warranty programs. Acting as an offset and providing some relief was $29 million the world's largest retailer received as its share of an antitrust litigation settlement with Visa and MasterCard.

As it relentlessly pursues its low-pricing philosophy, average gross margin thinned somewhat during the period, narrowing by 20 basis points, or two-tenths of a percentage point, to 23.1 percent from 23.3 percent. Operating costs held relatively steady, slipping by 10 basis points, or one-tenth of a percentage point, to 18.8 percent of sales from 18.9 percent a year ago.

Wal-Mart Stores Inc.

a. Third quarter results include $817 million in miscellaneous income, up 7.2 percent from $762 million during the same period a year ago. Total sales were $76.3 billion, up 10.1 percent from $69.3 billion.
b. Nine month results include $2.4 billion in miscellaneous income, up 6.5 percent from $2.2 billion in 2004. Total sales of $222.5 billion rose 9.9 percent from $205.2 billion.
Qtr. 10/31 (x000) 2005 2004 % change
Sales $75,436,000a $68,520,000a 10.1
Oper. income (EBIT) 4,049,000 3,784,000 7.0
Net income 2,374,000 2,286,000 3.8
Per share (diluted) 0.57 0.54 5.6
Average gross margin 23.1% 23.3%
SG&A expenses 18.8% 18.9%
Nine months (x000) 2005 2004 % change
Sales 223,155,000b 203,005,000b 9.9
Oper. income (EBIT) 12,669,000 11,793,000 7.4
Net income 7,640,000 7,103,000 7.6
Per share (diluted) 1.82 1.66 9.6
Average gross margin 23.2% 23.1%
SG&A expenses 18.6% 18.4%


Wal-Mart Results by Segment

Qtr. 10/31 (x000) 2005 2004 % change
Wal-Mart Stores
Sales $50,243,000 $45,888,000 9.5
Same-store sales 2.9% NA
Operating income 3,312,000 3,115,000 6.3
Sam's Club
Sales 10,019,000 9.082,000 10.3
Same-store sales 8.1% NA
Operating income 342,000 306,000 11.8
International
Sales 15,174,000 13,550,000 12.0
Same-store sales NA NA
Operating income 797,000 698,000 14.2
Nine months
Wal-Mart Stores
Sales 149,693,000 136,373,000 9.8
Same-store sales 3.1% NA
Operating income 10,610,000 9,921,000 6.9
Sam's Club
Sales 29,143,000 27,139,000 7.4
Same-store sales 5.0% NA
Operating income 342,000 306,000 11.8
International
Sales 44,319,000 39,493,000 12.2
Same-store sales NA NA
Operating income 2,214,000 2,009,000 10.2


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