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  • Cecile Corral

Home 'Under Pressure' at Wal-Mart Stores

As consumers turned their attention toward basic necessities, Wal-Mart Stores Inc. reported solid sales and earnings gains for the first quarter, with earnings per share up nearly 12% to 76 cents.

Total company sales for the quarter ended April 30 rose 10.2% to $94.1 billion. Sales at U.S. Wal-Mart stores climbed 6.6% to $59.1 billion, with Sam's Club sales up 7.6% to $11.1 billion and international sales skyrocketing 22.0% to $23.9 billion.

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.

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 cards 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.

Cecile CorralCecile Corral | Senior Product Editor, Home & Textiles Today
ccorral@homeandtextilestoday.com

Cecile B. Corral has been a product editor with Home Textiles Today since late 2000. She covers the area and accent rug, kitchen textiles, table linens, beach towels, decorative bath and decorative pillow categories, as well as some retail subjects.

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