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Tuesday, 14 May, 2002, 21:12 GMT 22:12 UK
Wal-Mart helped by bargain hunters
Asda store
Ten Asda supermarkets in the UK are to be revamped
A shift by US shoppers to bargain buying has helped Wal-Mart, the world's biggest retailer, report a surge of nearly 20% in profits.

The Arkansas-based firm, rated by Fortune magazine as the US's largest company, reported net profits of $1.65bn for the February to April period, compared with $1.38bn for the same quarter in 2001.

But although the figure were better than analysts had expected, the retailer was cautious about the ability of the US economic recovery to sustain a trade surge.

"We are experiencing a stronger economy than last year, but improvement slower than we or all of you would like to see," chief executive Lee Scott said.

While the firm was continuing to draw customers from rivals including bankrupt Kmart, but a switch by shoppers to low-price products, where margins are lower, had made profits growth harder to achieve.

The announcement came as official figures showed that US retail sales, which stalled in March, surged 1.2% last month.

And Texas-based retailer JC Penney revealed profits had more than doubled to $86m in the three months to 27 April.

Asda growth

Wal-Mart sales rose by 14.4% to $54.96bn over the quarter. On a like-for-like basis - including only stores open a year or more - growth was 8.1%.

At Wal-Mart's international operations, in countries including Argentina, Brazil, Canada China and Germany, sales rose by 18% to $8.99bn.

Both sales and operating profits at its UK Asda unit were "ahead of plan" Wal-Mart said, with the popularity of the George Essentials range supporting a surge of almost 30% in clothing sales.

"We believe sales growth was driven predominantly from new customers, with the average transaction size also increasing," Tuesday's statement said.

Asda is to increase to 13 its supercentre portfolio by the end of the year, including a 100,000 square foot outlet opening in Eastlands, Manchester next month.

Ten further supermarkets, in towns including Corby, Bishop Auckland and Basingstoke, are to be revamped.

Investor reaction

On the New York Stock Exchange, Wal-Mart shares closed up $2.35 at $57.39.

JC Penney stock ended $1.69 higher at $24.89.

See also:

01 Apr 02 | Business
Wal-Mart tops Fortune 500 list
19 Feb 02 | Business
Wal-Mart defies recession
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