By  on November 14, 2007

Wal-Mart Stores Inc. delivered earnings Tuesday ahead of Wall Street's analyst estimates while saying it was somewhat optimistic about the holiday season — despite economic pressures on consumers.

The results helped fuel an impressive rally on Wall Street. The Dow Jones Industrial Average soared 2.5 percent to 13,307.09. The S&P Retail Index surged 3.8 percent to close the day at 435.64. Shares of Wal-Mart gained 6 percent to $45.97.

For the three months ended Oct. 31, the retailer's net income rose 7.9 percent to $2.86 billion, or 70 cents a diluted share, from $2.65 billion, or 63 cents, in the same year-ago quarter. On a continuing operations basis, the company earned 70 cents a share versus 62 cents a year ago, beating Wall Street's consensus estimate of 67 cents.

Total revenues rose 8.9 percent to $91.95 billion from $84.47 billion, which included income from membership fees. Total sales gained 8.8 percent to $90.88 billion from $83.54 billion, which included a 6.4 percent jump in sales at Wal-Mart branded stores to $57.65 billion and a 1 percent comps gain.

For the nine months, net income rose 17.6 percent to $8.64 billion, or $2.11 a diluted share, from $7.35 billion, or $1.76 a share, last year. The company earned $2.14 a share from continuing operations, versus $1.97 a year ago. Total revenues jumped 8.7 percent to $271.37 billion from $249.57 billion. Sales at its stores were up 8.6 percent to $268.26 billion from $246.9 billion.

H. Lee Scott Jr., president and chief executive officer, told analysts during a conference call, that under the leadership of Eduardo Castro-Wright, president, executive vice president and ceo of the Wal-Mart Stores Division, the company sees improving trends in its apparel business.

Castro-Wright told analysts that operating income at Wal-Mart's U.S. division increased 11.1 percent to more than $4 billion. Charles M. Holley Jr., executive vice president for finance and treasurer, said international sales from continuing operations were $22.4 billion, up 16.9 percent over the prior year. He noted that Asda in the U.K. delivered "very positive sales results for the quarter."

Wal-Mart estimated that same-store sales would be up from flat to 2 percent in the fourth quarter, with earnings per share from continuing operations between 99 cents and $1.03. Full-year EPS from continuing operations is expected to be between $3.13 and $3.17, which includes an anticipated restructuring charge for Seiyu of $40 million after tax in the fourth quarter.

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