Wal-Mart, Sam's Report Strong Profits

By Alan Wolf On Feb 26 2007 - 8:00am

Improvements in labor productivity and product management helped Wal-Mart's domestic flagship stores and Sam's Club warehouse club division post solid profits for the fiscal fourth quarter and full year that exceeded revenue growth.

Wal-Mart's net sales for the three months, ended Jan. 31, 2007, rose 6.7 percent to $64.2 billion while comp-store sales grew 1.3 percent. Operating income for the period increased 11.3 percent to $5.3 billion.

At Sam's Club, net sales rose 4.4 percent to $11.1 billion, and comp-store sales grew 3.1 percent for the quarter, excluding the impact of fuel sales. Operating income increased 15.4 percent to $435 million.

For the full fiscal year, net sales at Wal-Mart rose 7.8 percent to $226.3 billion and comp sales increased 1.9 percent. Operating income grew 11.1 percent to $17 billion.

Full-year net sales at Sam's Club grew 4.5 percent to $41.6 billion while comps increased 2.9 percent, excluding the impact of fuel sales. Operating income increased 9.2 percent to $1.5 billion.

"We are extremely pleased to close fiscal year 2007 with both record sales and earnings," said Lee Scott, president/CEO of Wal-Mart Stores. "The Wal-Mart associates around the world stepped up and delivered a wonderful fourth quarter, and I am encouraged by their achievements as we head into the current fiscal year. Our company's performance for the fiscal year was helped by a strong fourth quarter."

The company's record results stemmed largely from offshore sales and acquisitions, while the domestic segment's profit gains were achieved through new cost controls, including the closing of layaway departments, the downsizing of store-level accounting offices, and a new scheduling system that more closely matches staffing levels to peak shopping hours.

In a recorded address, Scott said the company benefited by adhering to its guiding principal of "saving people money so they can liver better," and praised Eduardo Castro-Wright, president/CEO of the Wal-Mart Stores division, for his execution of a multi-pronged strategy that includes store and merchandise upgrades concurrent with a return to sharp pricing.