Wal-Mart reports better-than-expected earnings
Net income fell 7.4 percent to $3.79 billion, or 96 cents per share, compared with $4.01 billion, or $1.02 per share, the Bentonville, Ark.-based company said in a statement. Net sales rose 1.7 percent to $107.99 billion as cash-strapped consumers continued to flock to Wal-Mart for its rock-bottom prices. Excluding a legal settlement, profit was $1.03, beating the 99-cent consensus of analysts surveyed by Bloomberg News. Shares of the retailer rose in pre-market trading.
Wal-Mart showed surprising strength. U.S. sales rose 6 percent in the quarter while international revenue fell 8.4 percent, and Sam's Club sales were flat. U.S. stores even showed a gain in operating income, a rarity in retail these days. Even more telling were the gains in comparable same-store sales at both Wal-Mart and Sam's Club -- more than 2 percent. Again, positive news from any company is as rare as a nugget of gold.
The company expects to earn between 72 cents and 77 cents fiscal year 2010, and between $3.45 and $3.60 for the full year. The quarterly guidance is inline with estimates. Wal-Mart, though, is not immune from the economic downturn and plans to cut between 700 and 800 jobs at its corporate headquarters and close a service center to cut costs as growth in the U.S. slows.
The results underscore the growing power of Wal-Mart. New Chief Executive Mike Duke pointed out that the company ended last year with "record" free cash flow of $11.6 billion. The company, the largest private employer in the U.S., also continues to hire, adding 33,000 jobs. The quality of those jobs and the benefits being offered by the company is a matter of considerable debate.
Look for unions to redouble their efforts to organize Wal-Mart workers over the next few months, particularly if federal legislation to make it easier for workers to join collective bargaining units passes. The company also likely will continue to fight such efforts tooth and nail as it has done for years.