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Tuesday, 19 February, 2002, 14:58 GMT
Wal-Mart defies recession
Wal-Mart storefront
Wal-Mart: Staying ahead of the game
US retail giant Wal-Mart has unveiled a sharp rise in profits, confirming its resilience in the face of the global economic downturn.

The company said that net earnings for the three months to 31 January rose to $2.2bn (1.3bn), 9.2% up on the same period the year before.

The growth in profits was broadly in line with analysts' expectations.

But Wal-Mart shares, which rose sharply last month after the retailer surprised investors with unexpectedly strong Christmas sales figures, fell 33 cents to $59.70 in early trade in New York.

Riding out the downturn

"We had a good ending to a difficult year," said Wal-Mart chief executive Lee Scott.

"While the slow economy caused many companies to report negative or flat sales growth, we gained share in the difficult consumer market and grew our revenues."

Wal-Mart's sales for the period climbed 13.5% to $56.5bn.

The latest figures, which follow an 8% jump in profits during the previous three-months, confirmed the retailer's resilience in the face of a sharp slowdown in US economic growth over the past year.

Last year, US retailers faced the added test of a sharp drop in sales during the immediate aftermath of the 11 September attacks, although shoppers returned to the malls later in the year.

Wal-Mart, which specialises in selling goods at discounted prices, has cashed in on the new mood of caution among US consumers, poaching many customers from full-price retailers.

K-Mart opportunity

Wal-Mart, the world's biggest retailer, has extensive overseas operations including the UK's third-biggest supermarket chain Asda.

Although consumer confidence has remained unexpectedly strong during the US downturn, many of Wal-Mart's competitors have struggled over the past year.

Last month, the company's closest rival K-Mart filed for bankruptcy protection, citing weaker sales and intense competition against a backdrop of recession.

K-Mart, currently restructuring with the help of a $2bn loan, is expected to close hundreds of stores across the US.

Analysts said K-Mart's woes represent new growth opportunities for Wal Mart.

"The competitive environment is vastly easier with the bankruptcy of K-Mart," said Bill Dreher, a retail analyst at Robertson Stephens.

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See also:

13 Nov 01 | Business
Wal-Mart shrugs off slowdown
08 Nov 01 | Business
Gap loses out to discount trend
30 Oct 01 | Business
US consumer confidence plunges
30 Oct 01 | Business
World markets wobble
12 Oct 01 | Business
US retail sales plunge
10 Oct 01 | Business
Blame it on Bin Laden
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