4Q Profits Improve at Wal-Mart

-- Home Textiles Today, 2/21/2005 12:00:00 AM

Bentonville, Ark. — —

Bentonville, Ark. — Helped by stronger sales and continued expansion, fourth quarter profits at Wal-Mart Stores Inc. improved 16.2 percent, to $3.2 billion from $2.7 billion last year, modestly exceeding Wall Street expectations.

Earnings per share came in at $0.75, slightly ahead of a consensus forecast of $0.74.

Sales at the world's largest retailer, driven by continued worldwide expansion, climbed 10.4 percent, to $82.2 billion from $74.5 billion last year. But the crucial gauge of same-store sales rose at a sluggish pace of 1.5 percent during the all-important Christmas quarter, as consumers did their Christmas shopping elsewhere.

Same-store sales were strongest at SAM's Club, rising 2 percent, and were weak in the core Wal-Mart Stores, edging up just 1.4 percent.

Average gross margin improved by 70 basis points, or seven-tenths of a percentage point, to 22.5 percent from 21.8 percent a year ago. But gains there were largely offset by rising costs, which climbed by 60 basis points, or six-tenths of a percentage point, to 17 percent of sales from 16.4 percent a year ago.

Acting as a drag on the bottom line, interest expense shot up by almost a half during the closing quarter, by 47.8 percent, to $297 million from $201 million a year ago.

Wal-Mart Stores Inc.