Wal-Mart Stores Inc. on Thursday reported net income up 5.7 percent for the second quarter of its current fiscal year, prompting the retailer to raise its full year profit outlook.
The Bentonville-based retailer reported diluted earnings of $1.18 per share, at the high end of its previous guidance and up from $1.09 in the same quarter a year ago.
Sales at U.S. stores open at least a year rose 2.2 percent, within the company’s guidance of 1 percent to 3 percent.
Those same-store sales, a key measure in retailing, exclude the impact of stores opened or closed within the past year.
Wal-Mart now has recorded four consecutive quarterly gains in same-store sales, after a period when those sales declined for nine straight quarters.
Wal-Mart raised its fullyear earnings guidance to a range of $4.83 to $4.93 per share, from the previous range of $4.72 to $4.92.
“We feel very good about the U.S. business,” Charles Holley, chief financial officer, said in a conference call with reporters.
Store traffic increased for the third consecutive quarter, up 0.4 percent.
Holley said growth in thebusiness occurred “across the box,” and highlighted samestore sales gains in apparel, a weak spot for the company until recently.
“We’re really good at basics, and I think when we get away from that, we don’t do as well,” he said.
Retail analysts took note of the sales growth.
“The momentum of the U.S. business seems to be solid. They’re clearly showing that they’re operating well,” said Joe Feldman, assistant director of research for Telsey Advisory Group, a consumer research firm based in New York City.
John Lawrence, a retail analyst with Stephens Inc. in Memphis, said Wal-Mart has positioned its base business well for the future.
“The plan set forth a year and a half ago continues to show solid growth,” he said.
Mike Duke, Wal-Mart president and chief executive, said in the company’s earnings release that he was pleased with the quarterly performance.
“Our intense focus on delivering productivity initiatives and reducing costs allowed us to invest in lower prices for our customers and to deliver strong profitability for shareholders,” he said. “The team is very focused on delivering broad assortment and price leadership.Wal-Mart’s low prices drive greater customer loyalty.”
Same-store sales at Sam’s Club rose 4.2 percent, excluding the impact of fluctuating fuel sales.
Net sales for Wal-Mart’s international division grew 6.4 percent.
Bernard Sosnick, an analyst with Gilford Securities Inc., said in a research note that the company “delivered a solid performance.”
“In the face of weakening economies in the U.S. and globally, each of its segments - U.S. Wal-Mart, International and Sam’s - posted higher same-store sales and profits,” he said. “Overall, Wal-Mart demonstrated a combination of defensive and growth characteristics, which is what investors seek in this environment.”
Sosnick credited Duke for making continued progress in implementing everyday low pricing and reduced costs. He has a buy rating on Wal-Mart shares.
Despite the generally positive sales and earnings report, Wal-Mart’s stock closed down Thursday, ending the trading session at $72.15, down $2.30 or 3.1 percent. The stock has recently traded at an all-time high, rising 25 percent since mid-May before Thursday’s trading.
Front Section, Pages 1 on 08/17/2012