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Wal-Mart earnings fall

A Wal-Mart employee walks into a Wal-Mart store in Milpitas, Calif. Wal-Mart Stores Inc., the world's largest retailer, posted its first profit decline in a decade as second-quarter earnings fell 26 percent due to the cost of selling its Germany operation. (Associated Press / The Spokesman-Review)
From Wire Reports The Spokesman-Review
A Wal-Mart employee walks into a Wal-Mart store in Milpitas, Calif. Wal-Mart Stores Inc., the world's largest retailer, posted its first profit decline in a decade as second-quarter earnings fell 26 percent due to the cost of selling its Germany operation. (Associated Press / The Spokesman-Review)

For the last 10 years, Wal-Mart has produced quarter after quarter of higher earnings.

That is, until Tuesday, when the world’s largest retailer stumbled for the first time in a decade, posting a profit decline after paying a hefty price for closing its loss-making German stores.

High energy prices, which boosted Wal-Mart Stores Inc.’s sales and costs in the U.S., had a hand in the lower earnings, too.

Customers saved gas, now at around $3 a gallon nationwide, by making fewer shopping trips. Wal-Mart’s own fuel and utilities bills rose, also. Chief Executive Lee Scott said sales were disappointing at Wal-Mart’s U.S. stores, its largest division.

“In the United States, customers tell us they are most concerned about gas prices,” Scott said in a prerecorded message. “This has been consistent every month this quarter.”

Results fell in line with expectations and the company reaffirmed its guidance for the year, but analysts questioned whether a third-quarter forecast on the low end of expectations meant the company could meet its target for the year.

•Staples Inc.’s second-quarter profit rose 19 percent as the nation’s biggest office products seller reversed recent sales growth erosion by picking up customers of newly closed OfficeMax stores and posting strong copying services sales.

Framingham-based Staples on Tuesday reported net income for the May-July period of $161.2 million, or 22 cents per share. That compared with a profit of $135.2 million, or 18 cents per share, in last year’s second quarter.

Revenue rose 12 percent to $3.88 billion from $3.47 billion a year ago.

The most recent quarter’s profit matched the consensus forecast of analysts surveyed by Thomson Financial. Shares of Staples rose 16 cents to close at $25.05 on the Nasdaq Stock Market.

•The Home Depot Inc. said Tuesday its second-quarter profit rose 5.3 percent, it will resume same-store sales reporting and it is investing another $350 million in improving its business.

The results for the nation’s largest home improvement store chain in the recent quarter beat Wall Street expectations, when a one-time tax charge is excluded, and its shares rose more than 3 percent.

Banc of America Securities analyst David Strasser wrote in a research note that the increased spending on stores during the second half of the year is a good idea considering “that had been a concern for many investors that Home Depot was pulling labor off the floor.”

• Delphi Corp., the nation’s largest auto supplier, said Tuesday it lost $2.6 billion in the first half of 2006, due largely to the cost of employee buyout and early retirement packages that are key to the company’s bankruptcy reorganization.

The loss was more than three times the $741 million that Delphi lost in the first half of 2005.

The company, which filed for Chapter 11 bankruptcy protection in October, said revenues increased slightly to $14.0 billion from $13.9 billion last year.

•Deere & Co., the world’s largest farm equipment maker, said Tuesday that third-quarter profit rose 13 percent, but trimmed its full-year earnings forecast amid weaker-than-expected sales of its trademark tractors and agricultural machinery.

Moline-based Deere reported net income for the quarter totaled $436 million, or $1.85 per share, compared with a profit of $387 million, or $1.58 per share, in the same three months last year. Revenue increased 8 percent to $6.27 billion, up from $5.82 billion a year ago.

Analysts predicted a profit of $1.81 per share on revenue of $5.77 billion for the quarter that ended July 31, according to a Thomson Financial poll.

•Retailer Abercrombie & Fitch Co. on Tuesday said earnings rose 14 percent in its second-quarter, helped by a strong sales performance in its Hollister line of stores that cater to teens with surfer-inspired looks.

The company’s stock jumped in after-hours trading when it said it expected to beat Wall Street expectations for its full-year earnings by 10 to 15 cents a share.

Profits rose to $65.7 million, or 72 cents per share, for the quarter ended July 29, up from $57.4 million, or 63 cents a share, a year ago.

Sales grew 15 percent to $658.6 million from $571.6 million.

Analysts surveyed by Thomson Financial expected earnings of 71 cents a share on sales of $659 million.

The stock rose 9 percent to $60.64 in after-hours trading.