Wal-Mart beats Q4 estimates

Wal-Mart has reported higher than expected fourth quarter estimates, although its profit forecast for the first quarter and fiscal year 2007 were below analysts' estimates. Net income for the fourth quarter rose 13 percent to $3.59 billion (£2.06 billion) from $3.16 billion during the same period the year before. Revenues climbed 8.7 percent to $90.13 billion, including a retail sales gain of 8.6 percent to $89.27 billion. Same-store sales rose 3.1 percent.

For the full year, net income rose 9.4 percent to $11.23 billion, up from $10.27 billion a year ago. The company saw revenue gains of 9.6 percent to $315.65 billion from $288.13 billion the year before, including a sales rise of 9.5 percent to $312.43 billion. Year-on-year the world's largest retailer realised sales gains of 9.6 percent or $27.5 billion. According to WWD, this amount is equal to the annual sales of Best Buy and far higher than Federated Department store's annual sales of $22 billion. Meanwhile, its biggest competitor Target has annual sales of $46.8 billion.

The company's forecast for the first quarter of fiscal 2007 fell below analysts' expectations. President and chief executive, H. Lee Scott, said in a discussion with Wall Street analysts that utility costs caused expenses as a percentage of sales to be up for the quarter. "We continue to see higher gasoline and utility prices affecting our opening price point customers," he said. "We are committed to maintaining our every day low price strategy so we can continue meeting the needs of these loyal customers."

Scott said that Wal-Mart aimed to grow sales by offering merchandise that will appeal to customers. "We want our merchandise to appeal to a broad range of customers who are already shopping in our stores," he said. "We want customers to shop Wal-Mart for all their needs from consumables to Metro 7 apparel and accessories." Apparel line Metro 7 enjoyed a particularly strong performance and will expand to 1,600 stores by September of this year. Furthermore, the existing offer will be upgraded with the remodelling of 1,800 stores within the next 18 months.

Meanwhile, international sales increased 9.6 percent to $18.4 billion, but missed expectations because of weaker sales in the UK . British subsidiary, supermarket Asda saw sales growth "in the low single digits". The retailer was optimistic about the coming year though. "I think the next year is going to be very important for Asda," said Wal-Mart's chief financial officer Tom Schoewe. "During the course of this last year, they did a nice job with their restructuring and getting their costs back in line." The strongest international results were gained in Brazil , China , Argentina and Mexico .