Wal-Mart's overseas profit growth accelerates

By James Davey and Rhys Jones

LONDON (Reuters) - Wal-Mart Stores Inc's international businesses saw faster growth in profit and underlying sales in the second quarter, helped by another strong performance from Asda in Britain.

The world's biggest retailer, which serves over 100 million shoppers a year from over 8,000 stores in 15 countries, said international operating profit at constant exchange rates rose 13.3 percent to $1.38 billion in the three months to July.

International sales on the same basis were up 11.5 percent at $28.2 billion, it said on Thursday.

That performance topped a 7.8 percent rise in underlying international operating income, on sales up 9.1 percent, in the U.S. company's first quarter.

"International is our fastest growing business. Asda is performing especially well and continues to grow market share," said chief executive Mike Duke.

However, currency exchange rates meant reported international sales and profit were reduced by $4.2 billion and $237 million respectively.

Wal-Mart, which employs more than 2 million people and makes just under a quarter of its sales outside the United States, beat forecasts with a flat second-quarter group profit on Thursday.

Second-quarter like-for-like sales at Asda, Britain's second-biggest grocer, increased 7.2 percent, excluding fuel and adjusted for Easter.

That topped a 4.3 percent rise in underlying sales from market leader Tesco for the 13 weeks to May 30 and was close to the 7.8 percent rise from J Sainsbury, Britain's third largest grocer, for the 12 weeks to June 13.

Judith McKenna, Asda's finance director, said Asda's market share had grown to 17 percent. "We continue to outperform the market and our own expectations," she told reporters.

She said profit was growing ahead of sales, with the firm's success driven by accelerating food volumes, as food inflation was at its lowest level in two years.

But she cautioned that British consumer confidence remained low, driven by concerns about job security. "This is not going to be a straight line economic recovery," she said.

McKenna played down speculation linking chief executive Andy Bond with a move to Marks & Spencer, insisting he was "100 percent committed" to Asda.

In Mexico, comparable store sales at Walmex rose 4 percent, despite the ongoing swine flu crisis, which led to several lost days of trading. In Brazil, sales rose 2 percent.

In China, comparable store sales were up 2.5 percent at Wal-Mart China and up 0.1 percent at Trust-Mart.