Wal-Mart Still Strong
By Staff -- Home Textiles Today, 11/28/2005
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.
| Qtr. 10/31 (x000) | 2005 | 2004 | % change |
| Sales | $75,436,000a | $68,520,000a | 10.1 |
| Oper. income (EBIT) | 4,049,000 | 3,784,000 | 7.0 |
| Net income | 2,374,000 | 2,286,000 | 3.8 |
| Per share (diluted) | 0.57 | 0.54 | 5.6 |
| Average gross margin | 23.1% | 23.3% | – |
| SG&A expenses | 18.8% | 18.9% | – |
| Nine months (x000) | 2005 | 2004 | % change |
| Sales | 223,155,000b | 203,005,000b | 9.9 |
| Oper. income (EBIT) | 12,669,000 | 11,793,000 | 7.4 |
| Net income | 7,640,000 | 7,103,000 | 7.6 |
| Per share (diluted) | 1.82 | 1.66 | 9.6 |
| Average gross margin | 23.2% | 23.1% | – |
| SG&A expenses | 18.6% | 18.4% | – |
| a. Third quarter results include $817 million in
miscellaneous income, up 7.2 percent from $762 million during the same period a
year ago. Total sales were $76.3 billion, up 10.1 percent from $69.3
billion. b. Nine month results include $2.4 billion in miscellaneous income, up 6.5 percent from $2.2 billion in 2004. Total sales of $222.5 billion rose 9.9 percent from $205.2 billion. |
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| Qtr. 10/31 (x000) | 2005 | 2004 | % change |
| Wal-Mart Stores | |||
| Sales | $50,243,000 | $45,888,000 | 9.5 |
| Same-store sales | 2.9% | NA | – |
| Operating income | 3,312,000 | 3,115,000 | 6.3 |
| Sam's Club | |||
| Sales | 10,019,000 | 9.082,000 | 10.3 |
| Same-store sales | 8.1% | NA | – |
| Operating income | 342,000 | 306,000 | 11.8 |
| International | |||
| Sales | 15,174,000 | 13,550,000 | 12.0 |
| Same-store sales | NA | NA | – |
| Operating income | 797,000 | 698,000 | 14.2 |
| Nine months | |||
| Wal-Mart Stores | |||
| Sales | 149,693,000 | 136,373,000 | 9.8 |
| Same-store sales | 3.1% | NA | – |
| Operating income | 10,610,000 | 9,921,000 | 6.9 |
| Sam's Club | |||
| Sales | 29,143,000 | 27,139,000 | 7.4 |
| Same-store sales | 5.0% | NA | – |
| Operating income | 342,000 | 306,000 | 11.8 |
| International | |||
| Sales | 44,319,000 | 39,493,000 | 12.2 |
| Same-store sales | NA | NA | – |
| Operating income | 2,214,000 | 2,009,000 | 10.2 |
