(Adds analyst's comment, updates share price)
By Nandita Bose
CHICAGO Feb 21 Wal-Mart Stores Inc
reported higher-than-expected U.S. sales on Tuesday for the
crucial holiday quarter as its low prices attracted more
customers to its stores and online activity accelerated.
Shares of the world's largest retailer rose more than 3
percent as its results bucked a string of disappointing holiday
sales figures from rivals including Target Corp, which
is due to report earnings on Feb. 28.
Investors shrugged off an 8 percent drop in gross profit
margins stemming from Wal-Mart's continued efforts to cut prices
to make them more competitive, along with discounts offered
after the holiday season.
"A number of things helped Wal-Mart over the holiday
quarter," said Neil Saunders, managing director of retail
research firm Global Data. "Foremost among these was the
strategic decision to invest in price and to heavily promote
this fact to consumers."
Wal-Mart said it expected earnings per share of 90 cents to
$1 for the current quarter and $4.20 to $4.40 for this fiscal
year. Analysts' estimates were within both ranges.
A delay in refund checks from the U.S. Internal Revenue
Service has curbed customer spending somewhat, Chief Financial
Officer Brett Biggs said on a conference call with reporters.
However, he still expects U.S comparable sales - those at stores
open at least a year and through e-commerce - to rise 1 percent
to 1.5 percent this quarter.
The company said U.S. comparable sales rose 1.8 percent,
excluding fuel price fluctuations, during the fourth quarter
ended on Jan. 31. Analysts on average were expecting a 1.3
percent increase, according to research firm Consensus Metrix.
Under Chief Executive Officer Doug McMillon and new
e-commerce chief Marc Lore, Wal-Mart has been trying to catch up
with online rival Amazon.com Inc. In October, the
company said it would slow the pace of new store openings to
focus on expanding its e-commerce business.
Biggs said comparable sales were up at all retail formats
due to a steady improvement in stores, strong growth from
e-commerce and a growing contribution from the online grocery
"We've now seen nine consecutive quarters of traffic growth
in our stores," Biggs said. "Clearly, we're gaining traction."
U.S. store visits rose 1.4 percent, compared with a
year-earlier increase of 0.7 percent.
Despite lower food prices, Biggs said comparable sales rose
in Wal-Mart's grocery business, which accounts for nearly 53
percent of overall revenue.
Net income attributable to Wal-Mart fell to $3.76 billion in
the fourth quarter from $4.57 billion a year earlier, reflecting
the impact from discontinued real estate projects and severance.
Excluding items, earnings per share of $1.30 exceeded the
analysts' average estimate of $1.29, according to Thomson
Revenue rose 1 percent to $130.9 billion, with the
depreciation of the Mexican peso to the U.S. dollar curbing
growth. Excluding currency fluctuations, sales came to $133.6
Online sales increased 29 percent, compared with a
third-quarter rise of 20.6 percent. That business added 0.8
percentage points to the fourth-quarter comparable sales gain.
Lore said Wal-Mart had a "nice uptick" in online sales after
it recently made two-day shipping free in the United States. The
retailer will keep looking for acquisitions "wherever it makes
sense," he added.
Wal-Mart recently acquired online outdoor clothing and gear
retailer Moosejaw for $51 million in cash, its third purchase in
about six months.
The company announced a 2 percent dividend increase to $2.04
a share annually.
Shares of Wal-Mart were up 3.2 percent at $71.57 in midday
trading. At Friday's close, they had risen 0.4 percent year to
(Reporting by Nandita Bose in Chicago Editing by W Simon and
Lisa Von Ahn)