Wal-Mart Stores Inc. (NYSE: WMT) recently announced that the company’s first-quarter profits rose 6.9 percent. For April, the company recorded a 3.2 percent same-store increase without fuel. Estimates for May are expected to be flat and the company issued a cautious outlook for the second quarter due to the struggling economy.
Wal-Mart earned $3.02 billion, or 76 cents per share, for the three-month period ending April 30, up from $2.83 billion, or 68 cents per share, one year earlier. The company attributes the strong quarter and beating Wall Street’s expectations to improving inventory management and providing better customer service. Wal-Mart’s research shows that customers buy in larger quantities at the start of the month, then in smaller quantities toward the end of the month when money is tighter. The company has successfully adjusted its inventory levels to cut costs.
Higher transportation costs will continue to impact earnings for the remainder of the year. The company’s chief financial officer expects second-quarter sales to be between flat and up 2 percent. In addition, the company expects to earn between 78 cents per share and 81 cents per share, and may fall short of analyst expectations of 81 cents a share. The company noted that the economy will be a “critical factor” in 2008.
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