Wal-Mart Profit Beats Estimates as Shoppers Are Lured by Discounts

By Chris Burritt
Bloomberg News Service
Wednesday, February 18, 2009

Wal-Mart Stores, the world's largest retailer, reported fourth-quarter profit yesterday that fell less than analysts estimated as discounts on groceries and drugs attracted consumers.

Consumers pinched by the highest U.S. unemployment in 16 1/2 years shopped Wal-Mart for discounted food and medicine. Groceries, which generate more than 40 percent of Wal-Mart's revenue, lured consumers buying necessities while cutting back on clothes and other discretionary purchases.

Net income for the three months ended Jan. 31 declined to $3.79 billion, or 96 cents a share, from $4.1 billion, or $1.02, in the same period a year earlier, the Bentonville, Ark.-based company said yesterday in a regulatory filing. Excluding costs for a legal settlement, profit from continuing operations was $1.03, exceeding the 99-cent average of analysts' estimates compiled by Bloomberg.

"To have a company that's coming in ahead of expectations is a good thing in this environment. This is really a story of consistency and stability," Jason D. Pride, director of research for Haverford Trust of Radnor, Pa., told Bloomberg Television. The firm manages $5.5 billion, including 881,205 Wal-Mart shares, through December.

Revenue increased 1.7 percent, to $109.11 billion, helped by U.S. stores sales, which climbed 6 percent. International sales dropped 8.4 percent as the dollar strengthened against other currencies.

For the full fiscal year, earnings increased 5.3 percent, to $13.4 billion, or $3.39 a share, from $12.73 billion, or $3.13 a share, in 2008. Revenue increased 7.2 percent, to $405.61 billion from $378.48 billion in 2008.

Wal-Mart's shares climbed $1.71, or 3.7 percent, to $48.24. The shares have tumbled 14 percent this year, following an 18 percent gain in 2008 that made the company the best performer among the 30 members of the Dow Jones industrial average.

First-quarter profit will probably be 72 cents to 77 cents a share, Wal-Mart forecast. The average analyst estimate is 77 cents. Projected full-year profit of $3.45 to $3.60 is in line with the $3.58 average estimate.

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