Wal-Mart hits new highs

Staff -- Home Textiles Today, 11/18/2002 12:00:00 AM

BENTONVILLE, AR —

Lifted by a double-digit increase in sales and stronger margins, third-quarter profits at Wal-Mart Stores, the world's largest retailer, climbed by 22.9 percent, to $1.8 billion from $1.5 billion last year.

Sales at the global behemoth rose by 11.5 percent, to $58.8 billion from $52.7 billion, as the retailer layered on $6.1 billion in new revenues.

Same-store sales grew by 3.5 percent, including a 4.2 percent increase for the core Wal-Mart Stores business and a 0.4 percent increase at lagging Sam's Club.

Still charging ahead on the U.S. front, Wal-Mart pushed sales of core Wal-Mart Stores up by 11.8 percent, to $37.6 billion. Rapidly growing international sales climbed by 14.4 percent, to $9.9 billion; and sales at Sam's Club rose by 6.1 percent, fueled by new club openings.

Giving a lift to the bottom line, average gross margin widened by 40 basis points, to 21.9 percent of sales from 21.5 percent the prior year. Gross margin dollars climbed by 13.7 percent, to $12.9 billion from $11.4 billion, fueled by the combination of stronger sales and expanding margins.

Somewhat offsetting stronger margins, however, costs climbed higher by 30 basis points, moving to 17.6 percent of sales from 17.3 percent in the same period of 2001.

Hedging its bets about the future, in a persistently spooky retail environment, Wal-Mart is keeping a wary eye on how much merchandise it buys, and clamping down on stockpiles. Indeed, inventories rose by only 7.0 percent during the period, far behind the 11.5 percent rate of sales growth.

Giving voice to its concerns about the economy and antsy consumers, the retailer said in a conference call with investors that it expects fourth-quarter profits, which include the all-important Christmas holiday, to come in at the low end of the range of Wall Street estimates. Same-store sales were forecast at 3 percent to 5 percent for the closing quarter.

Wal-Mart Stores