Cost-cutting boosts Wal-Mart earnings

Wal-Mart Stores Inc. reported on Tuesday a better-than-expected 9.8 percent increase in fourth-quarter profits, helped by new strategy and cost-control measures at its flagship U.S. stores division.

But the world’s largest retailer still faces the challenge of reinvigorating sales at its U.S. stores amid fierce competition, analysts said.

“They’re getting some traction, but they’ve still got a lot of work to do,” said Stephanie Hoff, senior retail analyst at Edward Jones.

While profits and total sales were up about 10 percent each, Hoff noted that sales at stores open at least one year, a key measure of retail performance, only grew 1.3 percent in the fourth quarter after annual rates well over 5 percent early this decade.

Wal-Mart forecast same-store sales growth between 1 and 3 percent in the current quarter.

“Those numbers will have to get stronger and be at the 3 percent end of the (forecast) range for investors to be willing to pay a higher premium for the stock,” Hoff said.

Wal-Mart said profit for the period ending Jan. 31 was $3.94 billion, or 95 cents per share, up from $3.59 billion, or 87 cents, from one year prior. Even without a $98 million tax benefit worth 2 cents per share, Wal-Mart’s earnings beat the 90 cents per share forecast by analysts surveyed by Thomson Financial.

•Hewlett-Packard Co.’s first-quarter profit jumped 26 percent as the company benefited from higher sales of laptop computers, printers and printing supplies during a robust holiday spending season.

The company on Tuesday said it earned $1.55 billion, or 55 cents per share, for the quarter ended Jan. 31, compared with $1.23 billion, or 42 cents per share, for the same period last year.