Wal-Mart Still Strong

By Staff -- Home Textiles Today, 11/28/2005 12:00:00 AM

Bentonville, Ark. —

Helped by a double-digit rise in sales and strong operating profits in its warehouse clubs and international units, third quarter profits at Wal-Mart Stores Inc. edged up 3.8 percent, to $2.4 billion from $2.3 billion, despite a $109 million after-tax hit from hurricane damage and expenses tied to warranty programs.

Overall sales improved 10.1 percent, to $75.4 billion from $68.5 billion during the same period a year ago. Overall same-store sales improved 3.8 percent, helped by a strong boost from warehouse clubs. Same-store sales at the no-frills Sam's Club unit jumped up 8.1 percent, more than twice as high as the 2.9 percent increase at the core U.S. Wal-Mart business.

Taking a bite out of the bottom line, Wal-Mart said it took a one-time, after-tax charge of $40 million to cover the cost of damage from hurricanes Katrina, Rita and William. Putting further pressure on profits was $69 million in expenses tied to product warranty programs. Acting as an offset and providing some relief was $29 million the world's largest retailer received as its share of an antitrust litigation settlement with Visa and MasterCard.

As it relentlessly pursues its low-pricing philosophy, average gross margin thinned somewhat during the period, narrowing by 20 basis points, or two-tenths of a percentage point, to 23.1 percent from 23.3 percent. Operating costs held relatively steady, slipping by 10 basis points, or one-tenth of a percentage point, to 18.8 percent of sales from 18.9 percent a year ago.

Wal-Mart Stores Inc.

Wal-Mart Results by Segment