Wal-Mart reports lowest profit growth for three years
Wal-Mart reports lowest profit growth for three years By Andrei Postelnicu in New York FT.com Updated: 11:11 a.m. ET Nov. 14, 2005
Wal-Mart said it expected a strong holiday shopping season after hurricanes and petrol prices caused the the world's largest retailer to report the lowest profit growth in three years.
Lee Scott, chief executive, said Wal-Mart was going to be "very aggressive" in the vital Christmas shopping season when retailers make most of their money. However, he warned that the first two months of next year could be challenging as US consumers receive the winter's first heating bills. Nevertheless, Mr Scott said he expected 2006 to be a strong year.
Wal-Mart's net profits grew by 3.8 per cent to $2.4bn, or 57 cents per share in the third quarter, from $2.3bn, or 54 cents per share in the comparable year-ago quarter. Revenues rose 10 per cent to $76.4bn while sales at stores open at least one year advanced by 3.8 per cent. Most analysts polled by Thomson FirstCall were expecting 57 cents per share in net income.
Hurricanes Katrina, Rita and Wilma, which hit the southern US in late August, September and early October cost Wal-Mart $40m as the company closed 10 of its stores.
For the first nine months of the year, Wal-Mart raked in profits of $7.6bn, a 7.6 per cent increase from the $7.1bn it achieved in the same period in 2004. Revenues for the nine months ended October 31st rose 9.9 per cent to $223.2bn.
Wal-Mart said it expected fourth-quarter earnings to be between 82 and 86 cents per share, for an all-year total of between $2.64 to $2.68 per share.
In pre-market trading, Wal-Mart saw its shares rise 0.7 per cent to $49.35. They have lost 7.2 per cent of their value so far in 2005 and 12.8 per cent in the last 12 months, underperforming the shares of Target, a rival, which saw its stock rise 12.6 per cent so far this year and 13.1 per cent in the last 12 months.
Sales at Wal-Mart's international division, which includes the Asda stores in the UK, grew 10 per cent in the third quarter ended October 31st, to $15.7bn, from $13.6bn in the comparable period last year.
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