Wal-Mart 3Q profits hit $1.5B
By Staff -- Home Textiles Today, 11/19/2001 12:00:00 AM
Bentonville, AR — Although its expense picture was somewhat troubled, Wal-Mart Stores, Inc., still managed to break its records for sales and earnings in the third quarter. The company posted net income of nearly $1.5 billion for the quarter, on sales of slightly more than $52.7 billion.
The net-profit figure was 8.2 percent greater than the $1.3 billion the retailer earned in the third quarter of 2000. Also, Wal-Mart increased its operating profit by 8.3 percent between the two periods, to more than $2.2 billion.
Wal-Mart's sales increase of 15.5 percent between the third quarter of last year and this year overcame a 15.1 percent increase in its selling, general and administrative expenses. As part of its sales growth, the company overall pushed up comp-store sales by 6.7 percent. Because of the sales growth, its SG&A percentage was flat between the two years. Its operating margin as a percentage of sales declined by 40 basis points, to 21.5 percent, however.
Lee Scott, Wal-Mart's president and ceo, in recorded remarks about the results, said that business has rebounded since the Sept. 11 terrorist attacks.
"Our customers have returned to the stores. They continue to spend cautiously and show a preference for value," Scott said. "Although this has resulted in slower growth in the size of the ticket, the weaker economy has attracted additional customers making more frequent visits, and sales are running at pre-Sept. 11 levels."
Scott also noted that weekday traffic is picking up noticably, without cannibalizing weekend sales, an indication that consumers are shopping Wal-Mart for pick-up items they may previously have purchased at convenience stores or drug stores.
"We think it will be a good holiday season for Wal-Mart," Scott added. "We're gaining share, our customers still have spendable income, and we will be merchandised for a solid, but a competitive season."
Looking at the individual segments, Wal-Mart stores boosted their operating profit by 4.8 percent, to more than $2.3 billion. The stores' sales reached $33.6 billion, exactly 15 percent higher than in the third quarter of last year.
Sam's Club punched up its operating profit 12.3 percent in this year's third quarter, reaching $246 million, on sales of $7.3 billion. The latter figure grew 11 percent over sales from last year's third quarter, part of which was a 6.3 percent rise in its comp-store sales.
The company's international segment saw its operating profit skyrocket by nearly 43 percent, to $344 million. The segment's sales rose by nearly 17 percent, to $8.7 billion.
"Although our goal is for earnings to grow at a rate equal to or better than sales, [the 8 percent-plus rise in net income] represents a more than doubling of the earnings growth rate experienced in the first six months of this year," Scott said. "Despite the difficult economy, we are gaining market share and growing sales. Historically, this is a good environment for Wal-Mart."
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