Wal-Mart officials sounded an upbeat tone for the holidays as the retailer posted a 10 percent increase in third-quarter profit Thursday, saying that shoppers are responding to its early Christmas promotions.
NEW YORK — Wal-Mart officials sounded an upbeat tone for the holidays as the retailer posted a 10 percent increase in third-quarter profit Thursday, saying that shoppers are responding to its early Christmas promotions.
But the world’s largest retailer trimmed its profit outlook for the fiscal year as it faces a troubled global economy and the renewed strength of the dollar.
Nevertheless, Wal-Mart — with its renewed focus on low prices — has been one of the few bright spots in retail, as Americans have focused on necessities at discounters.
The trend has intensified since the financial meltdown in September, with Best Buy saying that “seismic” changes in consumer behavior have created “the most difficult climate” it has ever seen.
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“Wal-Mart is regaining market share across the board,” said Richard Hastings, strategist with Global Hunter Securities.
In apparel, which had been a trouble spot, Wal-Mart executives told analysts in a prerecorded call that the company is outpacing its rivals in sales at established stores — indicating to analysts that it is drawing customers away from moderate-price chains like Kohl’s and J.C. Penney. But it said shoppers are cautious about buying electronics, suggesting that they are watching their spending even at low-price Wal-Mart.
The retailer said it earned $3.14 billion, or 80 cents per share, in the quarter ended Oct. 31. That’s up from $2.86 billion, or 70 cents per share, a year earlier. Profit from continuing operations came to 77 cents per share, better than the 76 cents analysts expected.
Total sales for the quarter rose 7.4 percent to $98.64 billion.
Wal-Mart’s profit gain was a “standout” among what is turning out to be a dismal quarter for the rest of the industry, said Ken Perkins, president of RetailMetrics. He added that of the 50 retailers he tracks that have reported third-quarter earnings, 75 percent have reported lower profits from a year ago, while the remainder recorded a loss.
Wal-Mart has been able to pull ahead of competitors like Target with the right mix of merchandise as well as marketing like its “save money, live better” campaign. The company’s shares have risen 21 percent in the past 52 weeks, while Target’s have lost 40 percent of their value and J.C. Penney’s have shed almost 60 percent.
Wal-Mart offered a modest projection for same-store sales for the fourth quarter, predicting sales at stores opened at least a year will be up from 1 to 3 percent. But that’s better than its competitors, which expect declines.
Wal-Mart’s shares rose $2.31, or more than 4 percent, to close at $54.93 on Thursday.