Wal-Mart Upbeat for Holidays

BENTONVILLE, Ark. — Wal-Mart Stores said last week increased productivity and improved inventory management resulted in a better customer experience and contributed to improved financial results for the fiscal third quarter.

Mike Duke, president and chief executive officer, said Wal-Mart is optimistic going into the holidays.

“While the economy remains challenging for our customers and therefore to Wal-Mart sales, I continue to be encouraged by both our traffic and market-share gains across the operating segments,” he said in a conference call with analysts last week.

“The stores are running better than at any time in our history, and customer satisfactions are at record highs.”

Net income for the 13-week quarter, which ended Oct. 31, rose 1% to $3.2 billion. Sales increased 1.1% to $98.7 billion, and comparable-store sales for U.S. operations, excluding fuel, fell 0.4%.

For the 39-week period, net income was up 1% to $9.7 billion on a sales decline of 0.3% to $292.1 billion. Comps in the U.S., excluding fuel, rose 0.6%.

The company said it pro-jects earnings per share of $1.08 to $1.12 for the fourth quarter and $3.57 to $3.61 for the fiscal year.

Eduardo Castro-Wright, vice chairman responsible for Wal-Mart stores in the U.S., said third-quarter sales for his segment rose 1.2% to $61.8 billion, with comparable-store sales dropping 0.5%, due primarily to price deflation.

However, customer counts continued to increase, he noted, “because our customer experience has gotten even better, and customers trust the Wal-Mart brand for price leadership.”

Castro-Wright said grocery comps rose in the low single digits, and despite deflation in fresh categories, “overall unit sales were up,” with grocery prices actually declining for the first time since last year.

Inventory management helped drive the stores' financial performance, he said, with inventories down 6.2% during the quarter. “Having the right level of inventory in the stores and throughout our logistics system is a key factor in our strong operating expense management, and it is also critical to providing a clear merchandise presentation and improving the customer experience,” Castro-Wright said.

The company projects fourth-quarter comps for Wal-Mart's U.S. stores to be plus or minus 1%, Castro-Wright said. He also said deflation is likely to abate by the end of next year's first quarter.

Brian Cornell, president and CEO of Sam's Club, said sales, excluding fuel, declined 0.7% to $11.6 billion due to lower fuel sales related to a 28% drop in fuel prices per gallon and to deflation in produce, meat and dairy; comps, excluding fuel, declined 1.9%, he added.