Citing 'Economic Pressure', Wal-Mart Sales Up 8.8% in Q2, Comps Just 1.9%

BENTONVILLE, Ark. -- Wal-Mart Stores, Inc. here said this morning that net sales were up 8.8 percent for the quarter ended July 31, 2007, while income from operations was $3.11 billion, an increase of 4.1 percent from $2.98 billion in the previous second quarter.

Management was clearly not satisfied with the results, and Lee Scott, Wal-Mart Stores, Inc. president and c.e.o., vowed to hold firm to Wal-Mart's position as the low-price leader.

"Although some people will report that Wal-Mart has had record sales and earnings, our underlying operating performance this quarter is not what we expect of ourselves, and not what our shareholders expect of us," said Scott. "For the remainder of this year, our management team is focused on inventory improvements, delivering quality products at low prices, and store execution at the highest standards."

Scott pointed out that consumers continue to be pinched by the economy.

"Many customers around the world continue to be under economic pressure and they expect Wal-Mart to be their advocate," Scott said. "We will continue to be the undisputed price leader, from Asda in the United Kingdom, to every market in the United States."

Earnings per share from continuing operations were $0.76, up from $0.72 per share in the same prior year quarter. Earnings per share from continuing operations for the second quarter were affected by three items that provided a net benefit of $171 million after tax, or $.04 per share, the company said. Accruals for general liability and workers' compensation claims were reduced by $196 million after tax. The retailer also recognized $41 million in after tax gains from the sale of certain real estate properties. These benefits were offset by charges of $66 million after tax for legal and other contingencies.

Sales in the Wal-Mart Stores segment were $59.013 billion, up 6.5 percent in the quarter, and up 6.1 percent to $114.450 billion for the latest six months reported. For the Sam's Club segment, quarterly sales were $11.377 billion, up 8.6 percent, while half-year sales hit 21.7 billion, a gain of 7.2 percent.

Comparable store sales, with and without fuel sales, for the quarter were up 1.2 percent, compared to 1.5 percent in the year ago period for Wal-Mart Stores. For Sam's, comps were up 5.9 percent versus a gain of 2.6 percent without fuel; and up 6.5 percent compared to 3.6 percent for the year ago with fuel sales.

For total U.S. operations, comps were up 1.9 percent, versus 1.7 percent without fuel; and 2.0 percent versus 1.8 percent with fuel.
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