Wal-Mart's Low Prices Mean Big Profits In Crisis
http://www.huffingtonpost.com/2008/11/13/walmarts-low-prices-mean-_n_143494.htmlNEW YORK — Wal-Mart Stores Inc. reported a 10 percent increase in third-quarter profit Thursday but trimmed its profit outlook because of the troubled global economy and the renewed strength of the dollar.
The world's largest retailer said its renewed focus on low prices was attracting financially squeezed shoppers and that it was pleased with the results of early holiday price promotions.
The Bentonville, Ark.-based 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. Earnings from continuing operations were 77 cents per share.
Total sales for the quarter rose 7.4 percent to $98.64 billion from $91.86 billion a year earlier. Analysts surveyed by Thomson Reuters expected earnings of 76 cents per share on sales of $98.28 billion.
Despite economic difficulties around the world, "Wal-Mart has momentum as we move into the fourth quarter," the company's President and CEO Lee Scott said in a pre-recorded call to analysts. "At a time when our customer is feeling the pressure of a tough economy, Wal-Mart's price leadership is more important than ever."
Wal-Mart has been one of the few bright spots in a dismal retailing world, as Americans have switched to cheaper stores and focused on necessities. The trend has only intensified since the financial meltdown in September, with Circuit City Stores Inc. filing for bankruptcy protection this week and rival Best Buy Co. saying "seismic" changes in consumer behavior have created "the most difficult climate" the company has ever seen.
With the right mix of merchandise as well as marketing like its "save money, live better" campaign, Wal-Mart has been able to pull ahead of competitors like Target Corp. Wal-Mart shares have risen 21 percent in the past 52 weeks, while Target's have lost 40 percent of their value and J.C. Penney Co.'s have shed almost 60 percent in the same period.