November 15, 2005 in Business

Wal-Mart weathers storm, plans expansion

Associated Press
 

LITTLE ROCK, Ark. — The world’s largest retailer, Wal-Mart Stores Inc., posted a modest 3.8 percent in profit growth on Monday, the same day an internal document was made public that said the company expects to open or expand 484 stores across the United States next year, more than previously disclosed.

Wal-Mart’s income rose to $2.4 billion, or 57 cents per share, for the quarter ended Oct. 31 from $2.3 billion, or 54 cents per share, a year ago. Earnings in the latest quarter were reduced by $80 million, or 2 cents a share, due to hurricane related costs and other one-time events.

Analysts surveyed by Thomson Financial had forecast 57 cents per share.

Revenues were $76.35 billion with sales of $75.4 billion, an increase of 10.1 percent over the third quarter a year ago.

Wal-Mart shares rose 30 cents to close at $49.30 Monday on the New York Stock Exchange.

In a conference call with investors, Wal-Mart Chief Executive Lee Scott didn’t address criticism the company has come under for labor and other practices except to note Wal-Mart’s critics had some praise for the retailer’s response to Hurricane Katrina.

Scott said Wal-Mart sustained sales despite the hurricanes, gasoline prices that skyrocketed in the quarter and higher home heating bills. The hurricanes — Katrina, Rita and Wilma — closed hundreds of Wal-Mart stores, at least temporarily, but Wal-Mart’s third-quarter numbers held up.

Scott called the quarter a “pretty good performance in a difficult environment.”

Analyst Dan Hess, president and chief executive of Merchant Forecast, a New York-based independent research company, said Wal-Mart should do well for the holiday.

“With Wal-Mart, it’s not just about the numbers and the forecast. All types of social issues play a role in the public perception of Wal-Mart,” Hess said.

So far, the public is voting with its feet and is continuing to shop at Wal-Mart stores, he said.

Separately, the Associated Press made public an internal document regarding store openings and expansions that was obtained by a leading Wal-Mart opponent.

Wal-Mart Watch, a Washington, D.C.-based group backed by unions and environmental and other interests, said it will use the detailed list to alert activists in those communities listed in the document to help them rally against projects in their towns. The group said it received the document from Sprawl Busters, a group opposed to unchecked suburban development.

Wal-Mart confirmed that the document belonged to them.

“This report is simply a listing of all stores we expect to open over the next 12 to 14 months, and many are already under construction. Since the unions oppose us wherever we locate our stores, this new stolen document doesn’t seem to provide them any advantage,” Wal-Mart spokesman Marty Heires said.

Wal-Mart Watch said the list provided key details that would make it easier to organize local resistance because it names the specific towns and gives the size of expansion plans there.

“This internal document reveals where, when, and how Wal-Mart will bully its way across the country to open hundreds of new stores.

“With this in our hands, our committed supporters are now all the more ready to fight back,” Wal-Mart Watch Executive Director Andrew Grossman said in a statement.

Burt Flickinger, managing director of consulting firm Strategic Marketing, said the list’s publication could hurt Wal-Mart by giving advanced notice to opposition groups and local and state government officials who might be skeptical of letting Wal-Mart in.

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