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BENTONVILLE, Ark. -- Improved inventory control helped Wal-Mart Stores, Inc. here deal with the impact of rising gas prices and costs from its aggressive remodeling program in the first quarter of fiscal 2007 ended April 30. The retailer reported record sales and earnings yesterday, including a 12.3 percent jump in net sales and a 6.3 percent increase in earnings.
Net sales for the first quarter were $79.613 billion, while net income reached $2.615 billion, an increase of 6.3 percent from the first quarter of fiscal 2006. Earnings per share were $0.63, up from $0.58 per share in the same prior year quarter.
"We are very pleased with our start to this fiscal year," said president and c.e.o. Lee Scott in a statement. "We continued to have record sales and earnings, and our inventory performance was the best we have seen in many quarters. The success of this quarter was the result of our focus on three goals: driving sales, reducing costs, and improving inventory management."
Net sales at the Wal-Mart Stores division, which includes conventional stores, Supercenters, and Neighborhood Markets, were $52.499 billion, a 10.2 percent increase from last year. Sales at Sam's Club increased 6.8 percent to $9.775 billion.
Total U.S. comparable-store sales for the first quarter increased 3.8 percent, which is represented by a 3.8 percent increase for Wal-Mart Stores and a 4.3 percent increase for Sam's Club, excluding the impact of fuel.
Fuel sales impacted the Sam's Club and total U.S. comparable-store sales figures for the quarter by 0.5 and 0.1 percentage points, respectively. Including the impact of fuel sales, the Sam's Club and total U.S. comparable-store sales figures for the quarter ended April 30 would have been 4.8 percent and 3.9 percent, respectively.
Standard & Poor's Equity Research reiterated a "strong buy" rating on Wal-Mart Stores after the retailer reported its first-quarter results.
"Results benefited from improved sales leverage, significant inventory reduction, and global sourcing benefits, despite higher utility costs," wrote S&P Equity Research analyst Joseph Agnese. "We see benefits from improved inventory control and merchandise mix offsetting negative impact from slower traffic trends on rising gas prices, increased costs associated with implementation of an aggressive remodel program, and higher interest expense."