Strong Sales Should Fuel Hefty Profit Gains for
Wal-Mart
When Wal-Mart (NYSE:WMT - news) reports second quarter
earnings on Tuesday, look for another estimate topping
performance. Recent monthly sales reports have been quite
robust. Sames store sales rose 9.6% in July, above the 7.1%
comps the company furnished last year. Quite an impressive feat
when you consider that summer months are typically a slower time for retail.
Total sales surged 16.3% in the month to $11.3 billion for the month of July. Some of those gains
are due to recent acquisitions, which are helping Wal-Mart fold to maintain its historical 15% top
line growth. For the first six months of its fiscal year, Wal-Mart's sales have grown 15.2% to
$73.6 billion, making the giant retailer set to post strong yearly sales, north of $150 billion.
Shares of Wal-Mart have deteriorated along with the stock market, but the retailer can
undoubtedly produce strong results, even if inflationary accelerates or the economy cools. The
company's discount strategy can weather all kinds of economic environments.
Wal-Mart is expected to earn $0.28 a share on Tuesday, which would be a 20% increase over
the $0.23 a share earned last year. In light of the strong July sales, Wal-Mart will likely beat
estimates by a penny or two a share. And this momentum should continue into August, a prime
time for Wal-Mart stores, as it is the back-to-school season. After that, Wal-Mart will prepare
itself for the holiday season, the peak earnings period for the company. We are very pleased with
Wal-Mart's results, and continue to recommend shares for purchase.
Analyst: Adam Lowensteiner
fnews.yahoo.com
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