Wal-Mart reports Surging Profits, slightly trims Forecast

Wal-Mart Stores on Tuesday reported third- quarter profit that outstripped analysts' estimates, boosted by flourishing international sales and reduced prices of more than one hundred holiday season's hottest toys and games.

The Bentonville, Arkansas based Wal-Mart yesterday reported an 11 per cent profit rise in third quarter ended October 31. Wal-Mart posted net income of $2.65 billion or 63 cents a share, compared with $2.37 billion, or 57 cents a share, a year earlier.

Analysts, on average, expected earnings of 60 cents per share. The retail giant itself on October 5 said that profit would likely be in the range of 59 cents to 63 cents per share.
Net sales, buoyed up by international acquisitions, totaled $83.5 billion, an increase of 12 percent from $74.6 billion.

Wal-Mart said quarterly sales at U.S. stores, open at least a year, however, were grew only1.5 percent, but the international sales were dynamic, despite its exit from the German and South Korean markets.

To give a boost to sales, Wal-Mart axed prices in mid-October on toys for the holidays and in November reduced the prices of 50 small appliances and around100 electronics items. It brought down the price of a 42-inch, or 107-centimeter, Panasonic plasma television 28 percent to $1,294. Wal-Mart also reduced prices on top-selling flat-panel televisions and other home electronics to prop up its share of spending for the holiday season, a time when U.S. retailers make almost a third of their earnings.

"Wal-Mart is stocked with the best toys at the best prices 365 days a year, and this Christmas is no different! We're reducing prices on the hottest toys to help Santa spread holiday cheer," said Scott McCall, Vice President and Divisional Merchandising Manager for Wal-Mart Stores. "We're offering the best value on top toys, including the X-Games BMX MotoBike and Bratz Kidz, to name a few, in order to make this special time of year more affordable and enjoyable for families everywhere."

Meanwhile, Target, the second-largest U.S. discount chain behind Wal-Mart, said that its profit had jumped 16 percent to $506 million or 59 cents a share, from $435 million, or 49 cents a share. Revenue of Minneapolis based Target rose 11 percent, to $13.6 billion from $12.2 billion.

Wal-Mart and Target had opted same strategy to attract the customers unwilling to spend in recent months. They lured the customers with groceries and lower-priced toys.
Wal-Mart, the world's largest retailer operated 3,900 U.S. stores among its 6,640 locations worldwide as of Nov. 1.

Target, which operates 1,444 stores, introduced a groceries department to more stores and organic foods after Wal-Mart expanded its array of similar items. The Target chief executive, Robert Ulrich, also attracted customers with clothing and home goods by designers Michael Graves and Behnaz Sarafpour.

Wal-Mart has slightly trimmed its full-year earnings forecast. The retail store now expects that its earnings per share (EPS) from continuing operations for the fourth quarter will be between 88 cents and 92 cents, resulting in a full-year forecast for EPS of $2.85 to $2.89.

However, in August, Wal-Mart had predicted full-year earnings per share between $2.88 and $2.95. Analysts, on average, have been looking for fourth-quarter earnings of 92 cents a share.

Shares of Wal-Mart yesterday closed 3% higher at $47.66 in New York Stock Exchange.