NEW YORK — Wal-Mart Stores Inc. had a solid third quarter and its president and chief executive officer, H. Lee Scott, is bullish about the future.
The discounter's third-quarter results met Wall Street's expectations, despite three major hurricanes in the period and gas prices over $3 a gallon in many locations.
The third-quarter growth was driven by improvements in Wal-Mart's fashion offerings as well as increases in intimates and cosmetics.
But the surprise was Scott's optimism about the future, including holiday. The Wal-Mart ceo has in the past been vocal about the impact of higher fuel prices on retail customers. Many retailers are nervous about the prospects for holiday, given the potential for high heating bills and the after-effects of three major hurricanes in the Southeast, but Scott said Wal-Mart foresees continued improvement in the months ahead.
"Hurricanes dilute consumer wealth in the short term, but they are accretive to [gross domestic product]," Scott said on a conference call with Wall Street analysts. "They are accretive to employment and real income in the longer term. Although January and February could be difficult as holiday and utility bills come due, I like Wal-Mart's prospects for this next fiscal year. This will be driven by an improving economy, plus our continued improvements in merchandising and operations."
John Menzer, vice chairman, told analysts that Wal-Mart has a new holiday marketing campaign called "Wal-Mart: Home for the Holidays." He explained that it was geared to getting consumers to think of the discounter first as a shopping destination. Among the categories Wal-Mart deems key for holiday are electronics, toys, apparel and home.
Menzer also noted the recent introduction of Metro 7, the retailer's new fashion line, and improved positioning of the George collection in its stores.
For the three months ended Oct. 31, Wal-Mart said income rose 3.8 percent to $2.37 billion, or 57 cents a diluted share, from $2.29 billion, or 54 cents, in the same year-ago quarter. The company posted a one-time charge of 2 cents per share, in part for expenses related to hurricane costs and for higher freight costs.
Revenues in the quarter rose 10.1 percent to $76.25 billion from $69.28 billion, which included a 10.1 percent gain in sales to $75.44 billion from $68.52 billion. Wal-Mart said sales at its Wal-Mart stores rose 9.5 percent to $50.24 billion from $45.89 billion, and Sam's Club sales were up 10.3 percent to $10 billion from $9.1 billion, while U.S. comparable-store sales rose 3.8 percent, a 2.9 percent increase at Wal-Mart stores and an 8.1 percent jump at Sam's Club units.
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