Wal-Mart has 'weathered the worst'

Wal-Mart says the UK Asda chain is a "model acquisition"

The world's largest retailer believes it has weathered the worst of the consumer cutbacks prompted by the slowdown in economic growth in its native United States.

Wal-Mart, reporting a 17% rise in profits to $6.29bn (£4.35bn) in the year to the end of last month, admitted performance was affected by the decline in US growth.

Fortunately we do not see any indication that spending will further slow more from current levels

Lee Scott, Wal-Mart president

"It was a good year, but a year that was not quite up to our high expectations," president and chief executive Lee Scott said.

But the firm, which runs 3,100 US stores, said the spending slide by American consumers had bottomed out.

"We believe that the current slower retail environment is largely a result of declining consumer confidence," Mr Scott said.

"Fortunately we do not see any indication that spending will further slow more from current levels."

Record quarter

Between November and January, when the overall slump in US consumer confidence was taking hold, profits hit $2bn (£1.38bn) in a quarter for the first time.

But sales growth, at 10%, was below-trend during the quarter.

And, crucially for analysts, when only established stores are taken into account, sales rose 3.1% during the quarter, compared with 6.3% growth in the same period a year before.

Over the year, group sales rose almost 16% to $191bn, with fastest growth, of 41%, seen in the firm's expanding international operations.

During the year, Wal-Mart opened or bought 77 stores outside the US, mainly in Mexico, where the firm added 39 outlets, and Canada, where it added 20.

At the end of last month the firm owned more than 1,000 non-US stores, including the UK's Asda chain, bought two years ago for £6.7bn ($9.7bn).

Asda vs Sainsbury

While Tuesday's results statement failed to give a separate breakdown of Asda's figures, the chain, which Wal-Mart described as a "model acquisition", is thought to have achieved like-for-like sales growth of 5% during the year.

The figures failed to resolve whether Asda has overtaken Sainsbury to become the UK's second-ranking grocer, as Wal-Mart claimed in December.

Asda's market share hit 14.7% in the last 12 weeks of 2000, with 7.6 million customers visiting the chain, Wal-Mart said on Tuesday.

In December, Wal-Mart said Asda had achieved market share of 15.4%, compared with Sainsbury's 15%.

Sainsbury has disputed the claim, saying the figures were based on volume, not value, of sales.

On Wall Street, Wal-Mart shares climbed $1.11 to $53.47 in morning trade on Tuesday.