To: SusieQ1065 who wrote (152 ) 2/19/2002 10:30:47 PM From: SusieQ1065 Read Replies (2) | Respond to Wal-Mart (WMT) 59.43 -0.60: For the quarter ended Jan. 31, Wal-Mart's total sales jumped 13.5% to $64.211 bln and earnings per share increased 8.9% to $0.49. In reporting those record Q4 earnings and sales results, WMT did what most people expected it to do-- deliver on consensus sales and earnings expectations. What WMT failed to do, however, was deliver on its own goal, which was to grow earnings at the same rate of sales. That point aside, there was little to gripe about in assessing WMT's Q4 performance, which was highlighted by market share gains and a 6.9% increase in comparable store sales. For the year, WMT reported a profit of $1.40 per diluted share on a 13.8% increase in net sales to $217.799 bln; comparable store sales were up 5.8%. Looking ahead, WMT expects Q1 earnings to be $0.35-0.36 per share (First Call consensus is $0.35) and comparable store sales to increase 5-7%. For the fiscal year ending Jan. 2003, the company anticipates a profit of $1.74-1.76 per share (First Call consensus is $1.74), which is up from its previous guidance of $1.71. Interestingly enough, that guidance has failed to elicit a bullish response from investors. To be fair, WMT has enjoyed a strong run of late, so the lackluster response may simply be a case of investors using the actual report as a profit taking opportunity. At the same time, though, WMT did put a damper on the enthusiasm surrounding its guidance with an admission that it has yet to see evidence in customer spending patterns to suggest the economy is turning the corner. For a market concerned with the timing, and magnitude, of an economic recovery, and current valuation levels, that revelation hasn't done much to bolster investor sentiment. As for WMT, it is important to note that its competitive position remains as strong as ever. The company is picking up share in the wake of the Kmart (KM) bankruptcy, it is capitalizing on the appeal of its grocery category, it is managing its inventories well, and it has a business model that allows it to thrive in a challenging economic environment. Nevertheless, its guarded take on economic activity is apt to make further multiple expansion harder to come by over the near-term, just as it has for Cisco (CSCO) which was equally confident about its own prospects, but expressed reservations about the economic environment.-- Patrick J. O'Hare, Briefing.com
