Wal-Mart meets forecasts

No. 1 retailer posts improved 3Q income on weaker-than-expected sales.

November 14, 2005: 7:01 AM EST

NEW YORK (CNN/Money) - Wal-Mart Stores reported improved earnings Monday that met Wall Street forecasts despite softer-than-expected sales.

The No. 1 retailer reported net income of $2.4 billion, or 57 cents a share, in the quarter ended Oct. 31. That's up from $2.3 billion, or 54 cents a share, it earned from continuing operations a year earlier and was in line with the forecasts of analysts surveyed by earnings tracker First Call.

But net sales, which reflects the value sales less the cost of goods sold, came in at $75.4 billion, up 10 percent from the $68.5 billion a year earlier but less than the forecast of $76.3 billion from analysts.


The company also gave some guidance for the fourth quarter and full year that was roughly in line with Wall Street expectations as well as its previous outlook.

Wal-Mart said it is now looking for fourth quarter earnings of 82 to 86 cents a share, up from the 75 cents a share it earned in the key holiday shopping period a year ago. First Call's forecast is for fourth quarter EPS of 84 cents. The company also narrowed it earlier full-year guidance to between $2.64 to $2.68 a share. It had previously forecast full-year EPS between $2.63 and $2.70.

"I believe we will have a good holiday season," Wal-Mart CEO Lee Scott said in a recording about the results.

The company reported that the earnings included three special items -- an estimated $40 million of costs incurred as a result of hurricanes Katrina, Rita and Wilma; costs of $69 million related to product warranty programs, and a gain of $29 million of other income resulting from the Visa MasterCard antitrust litigation settlement. Those three items together reduced earnings by $80 million after taxes, or 2 cents a share.

Shares of Dow component Wal-Mart (Research) had been down about 1 percent in early European trading ahead of the earnings report.