Wal-Mart posts jump in earnings

LITTLE ROCK (AP) _ Wal-Mart Stores Inc., the world's largest retailer, on Thursday beat Wall Street expectations with first-quarter earnings up 16 percent from a year earlier. <br/><br/>Wall Street

Thursday, May 13th 2004, 11:10 am

By: News On 6

LITTLE ROCK (AP) _ Wal-Mart Stores Inc., the world's largest retailer, on Thursday beat Wall Street expectations with first-quarter earnings up 16 percent from a year earlier.

Wall Street tempered its enthusiasm, however, and the company's chief executive countered his overall optimism when he sounded a note of caution about rising gasoline prices.

Wal-Mart earned $2.2 billion, or 50 cents per share, for the period ending April 30, compared to $1.8 billion, or 41 cents per share, a year earlier. The results were a penny a share higher than forecast by analysts surveyed by Thomson First Call.

Net sales at the Bentonville-based company rose to $64.8 billion, up 14.2 percent from $56.7 billion a year ago.

Based on its first-quarter results, the company upped its forecast for earnings this year from $2.35 to $2.39. Analysts surveyed by Thomson First Call forecast that Wal-Mart will earn $2.37 from the year.

Kurt Barnard, a retail expert with Retail Forecasting LLC in Upper Montclair, N.J., said fears of inflation are affecting retailers.

``Retailers are generally catching it on the chin on Wall Street out of fear that we are going to be besieged with inflationary momentum, which is utter, sheer nonsense,'' Barnard said.

``It is springtime in the economy and springtime in retailing ... as perceived by consumers,'' Barnard said.

The reason is that consumers feel more secure in their jobs and see jobs as more plentiful, he said. Barnard said that will be reflected in retail earnings as the year progresses.

``Consumers are begining to sense that jobs are more easy to obtain and more plentiful, motivating shoppers to go to stores and do their buying,'' Barnard said.

``I am quite optimistic with respect to the balance of the year,'' Barnard said. He said Wal-Mart and Minneapolis-based Target Corp. should fare particularly well, but he also said the outlook is optimistic for luxury retailers, too. Target's first-quarter earnings, also released Thursday, were up 25 percent.

Wal-Mart president and chief executive Lee Scott said Thursday he is optimistic about the rest of the fiscal year, but he sounded a note of caution about prices at the pump.

Scott said he was buoyed by apparal sales in the quarter and said he sees that category remaining strong.

He said growth in employment and income will offset higher gas prices.

Scott noted that the company's failure at the ballot to win approval for a discount store in Inglewood, Calif., involved only one store and that the company is pressing on with its aggressive growth plans for California and elsewhere.

Sales in U.S. stores open at least a year, considered the best measure of a retailer's health, increased 6.4 percent in the quarter, Wal-Mart said. At the company's Wal-Mart division, same-store sales were up 5.9 percent and its Sam's Club warehouse store division saw same-store sales climb 8.8 percent for the period.

Wal-Mart said its discount stores segment, which include grocery sales, had a profit for the quarter of $3.121 billion, up 13.4 percent. Sam's Clubs had a profit of $267 million, up 30.9 percent for the period. The international division earned $563 million, up 46.6 percent.

Wal-Mart has stores in all 50 states and Puerto Rico and has stores in eight foreign countries. The company has a stake in Japanese retailer Seiyu Ltd., which has 400 stores.