Retail giant Wal-Mart's
Comparable same-store U.S. sales continued to trend higher. Sales at Wal-Mart stores increased 4.4%, only to be surpassed by a 6.7% comp gain at Sam's Club stores. International operations continued to boom. Sales for the quarter were up 17.3%, and profits rose 15.2%.
Every bit as importantly, a good bit of this growth flowed to the bottom line and right on over to the balance sheet. For the year, the company increased its net cash position by $2.4 billion.
On the earnings call, it was mentioned that January was a particularly strong month (and February is continuing this trend). It was also mentioned that apparel was marked down to get inventory in line for spring merchandise. Gross margins were better than forecast and increased for the ninth time in 10 quarters. Higher prices are not part of the formula, according to management, just getting a better product mix in front of the customer.
Wal-Mart's performance should frighten its peers both in supermarkets and broader retail. Safeway
Remarkably, Wal-Mart's operating margins nearly double those of Costco
All this shock and awe doesn't come cheap. At 29 times trailing earnings, Wal-Mart's execution is clearly reflected in the stock price. Still, with guidance calling for more double-digit earnings growth, retail investors can find value in Wal-Mart, especially given the paltry operating margins and lower growth exhibited by many of its peers.
Is Wal-Mart the bully on the block or capitalist manna? Talk it over with other Fools on the Wal-Mart discussion board.
Fool contributor W.D. Crotty does not own stock in any of the companies mentioned. W.D. helps Wal-Mart with repeated trips to Sam's and the local Supercenter.