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Wal-Mart's holiday discounts boost sales, but profit slips 13%

Wal-Mart's revenue increases 5.8% to $122.3 billion in the fourth quarter. Among other major retailers, Home Depot posts a 32% increase in profit, Macy's earnings rise about 12%, but Barnes & Noble sees a 14% profit drop.

February 22, 2012|By Tiffany Hsu, Los Angeles Times
  • Macy's Inc., the nation's largest department store chain, reports that its fourth-quarter profit was up nearly 12% to $745 million. Above, a Macy's store at the Westfield Mall in West Covina.
Macy's Inc., the nation's largest department store chain,… (Irfan Khan, Los Angeles…)

Wal-Mart Stores Inc.'s strategy of offering deep discounts over the holiday season helped the world's largest retailer perk up its revenue, but profit for its fiscal fourth quarter was down compared with a year earlier.

The chain had sales of $122.3 billion in the quarter that ended Jan. 31, up 5.8% from $115.6 billion the year before.

But Wal-Mart's profit slipped 13% to $5.4 billion, or $1.50 a share, compared with $6.2 billion, or $1.70 a share, a year earlier.

In same store sales, the chain reported a 1.5% year-over-year boost in the quarter — its second such increase after nine straight declines. Chief Executive Michael T. Duke credited lower prices, more in-store inventory and layaway programs for customers who "remain cautious about their finances."

"Our price leadership is making a difference across the United States, as many families are settling into a new normal," he said in a conference call with investors, promising still more discounts this year.

For the full year, Wal-Mart sales hit $443.9 billion, a 5.9% increase from $419 billion the previous year. Profit for the year was $16.4 billion, down 3.6% from $17 billion.

The Bentonville, Ark. discounter was cautious about the future, with William S. Simon, head of Wal-Mart's U.S. operations, telling analysts that "a challenging economy and rising gas prices will continue to drive customers to seek value," potentially leading customers to limit their shopping trips.

Wal-Mart released its earnings before the market opened Tuesday. Its stock fell $2.41, or 3.9%, to $60.07.

Other retailers also reported earnings Tuesday.

Home Depot Inc. got a boost from warm weather, which encouraged customers to tackle home improvement projects during its fiscal fourth quarter, which ended Jan. 29.

Sales hit $16 billion for the quarter, up 5.9% from $15.1 billion a year earlier.

Profit jumped nearly 32% to $774 million, or 50 cents a share, from $587 million, or 36 cents a share, a year earlier as the company worked to control costs. It was the chain's ninth straight quarter of double-digit profit growth.

Same-store sales in the U.S. improved 6.2%, and overall revenue rose 6% to $16 billion.

Home Depot's stock closed up 21 cents, or 0.5%, to $46.92 — a high for the last decade.

Macy's Inc., the largest department store company in the U.S., also had a strong fourth quarter. Profit was up nearly 12% to $745 million, or $1.74 a share, compared with $667 million, or $1.55 a share, a year earlier. Revenue jumped 5.5% to $8.7 billion, and same-store sales were up 5.2% year over year.

The company, which also owns Bloomingdale's, said it had a stellar holiday season. Online sales at macys.com and bloomingdales.com soared 40% in the quarter, which ended Jan. 28, and nearly the same percentage over the full fiscal year.

Macy's stock rose 44 cents, or 1.2%, to $36.69 on Tuesday.

But bookstore chain Barnes & Noble Inc.'s third-quarter results were less rosy. Profit fell 14% to $52 million, or 71 cents a share, compared with $60.6 million, or $1 a share, a year earlier as the company struggled with high costs.

The bookseller's stock slumped 57 cents, or 4.4%, to $12.54 on Tuesday.

Sales, however, were strong. Barnes & Noble's revenue increased 5% to $2.4 billion, with same-store sales rising 2.8%. Sales of physical books were up 4%, and digital content sales soared 85%. The company's Nook e-reader was also a strong performer, with a 64% sales surge.

On Tuesday, Barnes & Noble unveiled a $199 Nook, designed to compete with Amazon.com's same-priced Kindle Fire e-reader.

tiffany.hsu@latimes.com

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