St. Petersburg Times
Business
Special report
Video report
  • For their own good
    Fifty years ago, they were screwed-up kids sent to the Florida School for Boys to be straightened out. But now they are screwed-up men, scarred by the whippings they endured. Read the story and see a video and portrait gallery.
  • More video reports
Multimedia report
Print Email this storyEmail story Comment Letter to the editor
Fill out this form to email this article to a friend
Your name Your email
Friend's name Friend's email
Your message
 

Wal-Mart's lowered profits may be omen

By ASSOCIATED PRESS
Published May 16, 2007


ADVERTISEMENT

BENTONVILLE, Ark. - Wal-Mart Stores Inc. warned Tuesday that its profits in the current quarter could fall short of expectations after reporting an 8 percent gain in first-quarter earnings amid cost-cutting and strength in its warehouse clubs and international businesses. The company continued to struggle with its namesake discount business.

The tepid outlook from Wal-Mart - considered a barometer for the retail industry - could serve as a warning bell that rising gasoline prices and a weakening housing market will continue to eat away at consumer spending in the coming months.

"Quite honestly, we're not satisfied with our overall performance, " Wal-Mart president and chief executive Lee Scott said.

Same-store sales rose 0.6 percent in the first quarter at Wal-Mart's U.S. stores, with its Sam's Club warehouse stores accounting for all of the gain. Wal-Mart's namesake stores slipped 0.1 percent in the quarter, while Sam's Club warehouse stores rose 4.7 percent.

Same-store sales, or sales at stores opened at least a year, is a key gauge of retailer health because it measures growth at established locations open at least a year rather than at newly opened ones.

For the current quarter, Wal-Mart projected same-store sales to be up a modest 1 to 2 percent.

Bright spots include Sam's Club, which now has seven consecutive quarters in which profits grew faster than sales, Scott said.

Wal-Mart's international division, the fastest-growing part of the company, accounted for 23 percent of sales for the quarter.

The company reacted to inflation in Mexico by lowering prices of tortillas and other staples, which Scott said was an investment in customer loyalty.

In Great Britain, Scott said Wal-Mart's Asda chain added 1.5 million customers since mid 2005, half in stores that were already open.

Wal-Mart said it expects second-quarter profits to be within a range of 75 to 79 cents per share. Analysts surveyed by Thomson Financial expect a consensus 79 cents per share for the period.

Fast Facts:

Wal-Mart earnings

For its first quarter, Wal-Mart's net income rose 8 percent on an 8.5 percent increase in revenue.

1st Qtr Year Ago Revenue $86.41-bil $79.67-bil Net Income $2.83-bil $2.62-bil Per Share 68 cents 64 cents

[Last modified May 16, 2007, 00:43:17]


Share your thoughts on this story

[an error occurred while processing this directive]
Subscribe to the Times
Click here for daily delivery
of the St. Petersburg Times.

Email Newsletters

ADVERTISEMENT