Retreat from Germany Drags Down Wal-Mart Q2 Profits

17 August 2006

BENTONVILLE, ARKANSAS: A one-off charge relating to its withdrawal from the German market [WAMN: 01-Jun-06] dragged down profits in Wal-Mart's second fiscal quarter by 26%.

Analysts, however, are more troubled by lackluster performance of the retail giant's US division, which accounts for two-thirds of its sales.

Wal-Mart attributes this to higher fuel costs, rising utility costs, extra spending on back-to-school advertising and the expense of its program to remodel 1,300 stores before the Thanksgiving-Christmas holiday period.

Posting its first decline in nearly ten years, the Bentonville behemoth reported net income of $2.08 billion (€16.27bn; £10.98bn), down year-on-year by over one-quarter due to a $863 million charge relating to the pending sale of its 85 German stores.