By Nicole Maestri
NEW YORK (Reuters) - Wal-Mart Stores Inc posted a profit that beat Wall Street forecasts, fueled by sales at its namesake U.S. discount stores, and said it expects to outperform rivals as a global downturn forces shoppers to seek low prices.
Shares in the world's largest retailer rose 3 percent on the results, as investors shrugged off fears of a deeper global recession that prompted stock declines in the wider U.S. market.
"They kind of did everything right," said Joseph Feldman, a retail analyst with Telsey Advisory Group. "They're going to start buying back stock, they continue to control inventory well, February is off to a good start, and guidance for next year is as good as you could have hoped."
Wal-Mart said U.S. sales rose 6 percent in the quarter as it attracted more shoppers trying to save money. International sales slid 8.4 percent due to a stronger U.S. dollar, while sales at its Sam's Club warehouse clubs were flat.
Wal-Mart's sales have been outpacing direct competitors like Target Corp and Costco as well as lower-priced department stores like J.C. Penney in recent months as consumers stretch limited budgets by shopping in its stores for necessities like food and medicine.
"Our performance relative to competitors was exceptionally strong in the fourth quarter and throughout the year," Chief Executive Mike Duke said in a statement. "We expect this momentum to continue."
Profit fell to $3.79 billion, or 96 cents per share, for its fiscal fourth quarter, ended January 31, from $4.096 billion, or $1.02 share, a year ago.
Excluding a 7 cent charge per share for the settlement of class-action lawsuits, earnings came to $1.03 per share. Analysts, on average, had expected the company to earn 99 cents per share, according to Reuters Estimates.
Chief Financial Officer Tom Schoewe said in an interview that strong U.S. sales in January and a lower tax rate contributed to the better-than-expected results.
SAM WALTON'S TIME
To win business during the fourth quarter, which included the crucial holiday sales season, Wal-Mart said it spent more on advertising to tout its low prices.
"These guys are gaining share and doing much better than their competitors," said Christian Andreach, a managing director at money management firm Manning & Napier Advisors. "Even in the discount channel, they're doing very well."
Quarterly net sales rose 1.7 percent to $108 billion.
Sales at U.S. stores open at least a year rose 2.8 percent overall, with increases of 2.8 percent at the company's namesake stores and 2.5 percent at the Sam's Club division.
"The business model that Sam Walton created is perfectly positioned for the environment we live in now," Duke said, referring to the company's founder. "I do believe this is Wal-Mart's time." Continued...
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