Wal-Mart Earnings Soar 39 Percent, Food Sales Climb 36 Percent
by May 17, 1999 12:00 am 56 views
Wal-Mart Stores Inc.’s net income passed the $1 billion mark for the fourth-straight quarter and its net income was the highest-ever in a non-Christmas quarter for the Bentonville-based retailer.
The company reported a 39 percent increase in earnings per share, from 18 cents in 1998 to 25 cents, for the quarter ended April 30. That performance topped analysts’ expectations of 22-23 cents per share.
Total sales for the quarter were a record $34.7 billion versus $29.8 billion a year earlier.The company’s performance was driven by a 16 percent increase in total sales and a 9.3 percent increase in same store sales, a key measure for analysts in rating a company’s performance. Net income was $1.11 billion, compared with $828 million in 1998.
“We achieved our fourth consecutive quarter of net income in excess of $1 billion and the highest net income ever reported by the company in a non-Christmas quarter in our history,” Wal-Mart president and CEO David Glass said in a prepared statement. “During a traditionally slow quarter, we added $4.9 billion in sales and $282 million in net income.”
Morgan Keegan & Co. analysts noted that the company’s gross margins rose 43 basis points from the first quarter of 1998. They attributed that to a higher margin mix, 4 percent fewer markdowns and a 13 percent reduction in shrinkage. Operating expenses as a percentage of sales remained flat.
The analysts noted that Wal-Mart’s food division sales “rocketed” by 36 percent.
The only flaw in Wal-Mart’s numbers came in the international division, where operating profit dropped 22 percent, largely as a result of investments the company has made in Germany. Although the Morgan Keegan analysts expect a negative impact for the remainder of the year as a result of additional spending overseas, they say Wal-Mart’s “every day low pricing” strategy is being warmly received in Germany. The company is spending $300 million on systems, distribution center development, remodeling and implementation of that strategy.