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Wal-Mart (WMT)
Wal-Mart Q1 Profit Increases By 8 Percent
Wal-Mart reported that earnings for the first quarter were up by 8.1 percent to $2.83 billion, though the results still managed to disappoint. The earnings were in line with analysts expectations, however revenues fell short of analysts' estimates. Wal-Mart's Chief Executive and President Lee Scott expressed disappointment with the results, and the company also warned that their second quarter performance might miss forecasts.
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In a pre-recorded conference call, Scott said, "Quite honestly, we're not satisfied with our overall performance" and commented that profits and sales were "not where we would have expected to be nor where we believe we should be." Wal-Mart noted changing concerns for their customers, including income and inflation concerns, and having to save money as gas prices increase. Scott said, "You will see us being more committed than ever to price leadership."
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Some aspects of Wal-Marts operations have been promising. Wal-Mart's international division, which represented 23 percent of sales for the quarter, is the fastest growing division in the company, and Scott noted the division had a "great quarter." Scott also commented that Sam's Club stores have seen profits grow faster than sales for the past seven consecutive quarters.
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The problem for Wal-Mart remains with the U.S. stores, where sales of apparel and home items have been struggling. Those sections tend to have high margins, however due to poor sales, discounts were used to clear inventory, and that cut into the margins. On the other side of things though, pharmacy sales have been doing well, helped by Wal-Mart's offer for certain drugs of $4 per prescription.
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In the first quarter, same-store sales were up by just 0.6 percent; for the second quarter, Wal-Mart has estimate same-store sales will increase by 1 to 2 percent. For now, Wal-Mart has forecasted earnings between 75 cents and 79 cents a share for the second quarter, and the consensus estimate from analysts has been for 79 cents a share. Analysts are concerned about the inventory issues that Wal-Mart has been experiencing recently, among other issues. It looks like the management at Wal-Mart and analysts alike are concerned about the second quarter; it remains to be seen how effective the company will be in addressing those concerns.
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Profile |
The Company's principal activity is the operation of retail stores in various formats. The Company operates in three segments: Wal-Mart Stores, International and SAM'S CLUB. Wal-Mart Stores Segment Operate three different retail formats: Discount Stores, Supercenters and Neighborhood Markets. International Segment Consists of several different formats of retail stores and restaurants including discount stores, Supercenters and SAM'S CLUB'S that operate outside the United States. SAM'S CLUB segment consists of membership warehouse clubs. The Company operates in the United States, the United Kingdom, Argentina, Brazil, Canada, China, Germany, South Korea, Mexico and Puerto Rico. At 31-Jan-2004, the Company operated in 1,478 discount stores, 1,471 Supercenters, 538 SAM'S CLUB's in the United States and 64 Neighborhood Markets. It also operates 1,355 units internationally. The Company acquired Bompreco S.A. Supermercados do Nordeste on 01-Mar-2004.
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