BENTONVILLE, Ark. -- Wal-Mart Stores Inc.'s first-quarter profit rose 34 percent as the world's largest retailer lifted grocery sales and kept a lid on costs.
Net income rose to $1.11 billion, or 25 cents a share, from $828 million, or 18 cents, a year earlier. The results, announced yesterday, topped forecasts for the sixth quarter in a row, exceeding by 3 cents the average estimate of analysts polled by First Call Corp. Wal-Mart shares rose $2.125 to $47.3125.
Sales rose 16 percent to $34.7 billion, led by demand for food at its U.S. stores. Chief Executive Officer David Glass has been trying to get customers to visit Wal-Mart's stores more often by stocking snacks and canned goods at the discount stores and speeding the expansion of its supercenters, warehouse-size locations that include full grocery departments.
"The growth in the food business has been extraordinarily powerful," said Richard Church, an analyst at Salomon Smith Barney, who rates the shares "buy."
Wal-Mart is also holding down expenses by keeping inventories lean and forcing suppliers to absorb more costs. That helped fatten gross margins to 21.5 percent of sales from 21.1 percent.
The 39 percent rise in earnings per share is Wal-Mart's biggest in 11 years, said company spokesman Les Copeland.
"It's another spectacular quarter," said senior analyst Steve Paspal of Sovereign Asset Management, a unit of John Hancock Funds that held 1.03 million shares as of March.