Walmart raises dividend as profits rise

Global retailing giant Walmart Thursday announced increased quarterly profits and a higher dividend, even as it pointed to some US and foreign challenges in the near term.

Wal-Mart Stores Inc. reported net income of $5.6 billion in the fiscal fourth quarter ended January 31, up 8.6 percent from the year-ago period.

Revenues rose 3.9 percent from the year-ago period to $127.9 billion.

The world's largest retailer raised its fiscal 2014 dividend by 18 percent to $1.88 a share, compared with $1.59 paid during fiscal year 2013.

Investors smiled on the report, sending shares 2.8 percent higher on a day in which the equity markets fell.

The profits came in above analyst forecasts, but a research note by Deutsche Bank observed that the earnings quality was "low" because much of the upside came from an unusually low tax rate in the quarter.

The company said it had benefited in the fourth quarter from a lower-than-expected effective tax rate, which fell to 27.7 percent from 30.9 percent a year earlier.

On a conference call, Walmart chief financial officer Charles Holley said the expected tax rate for fiscal 2014 will range between 32 and 33 percent.

Walmart also cautioned that February 2013 sales in the US have "started slower than planned, due, in large part, to the delay in income tax refunds," said Walmart US president Bill Simon.

Simon said activity had picked up late last week. Still, the company forecasted "around flat" US comparable-store sales for the current quarter.

The Bentonville, Arkansas-based company forecasted more growth for 2014, with earnings per share in the $5.20-$5.40 range compared with $5.02 last year.

Walmart executives said the performance in its US and Sam's Club stores was generally strong, but flagged international operations as an area that needed improvement.

International sales rose 6.9 percent year-over-year to $37.9 billion. Yet Doug McMillon, president and chief executive of Walmart International, characterized the result as "disappointing" compared with expectations.

The company slowed the pace of opening new stores in Mexico, China and Brazil. Also, comparable store sales were weak in some developed markets, including Britain, Canada and Japan, McMillon said.

Company executives said Walmart was well-positioned for markets where austerity has taken hold.

"Our everyday low-price proposition in the marketplace will become even more relevant as our customers adjust to the changing economic conditions," Simon said.

"We will continue to expand our marketing programs... to communicate price leadership."