* International operations Q1 underlying sales up 9.1 pct
* International Q1 underlying operating profit up 7.8 pct
* Says outperforming in almost every foreign country
* “Stand out” quarter from Asda in Britain (Adds Asda CFO comments, more details)
By Mark Potter and James Davey
LONDON, May 14 (Reuters) - Wal-Mart Stores Inc (WMT.N) posted a 7.8 percent rise in first-quarter operating profit at its international businesses at constant exchange rates, helped by a “stand out” contribution from Asda in Britain.
The world’s biggest retailer, which serves over 100 million shoppers a year from over 7,900 stores in 16 countries, said on Thursday underlying international operating profit was $1.13 billion in the three months ended April 30.
International sales at constant exchange rates were up 9.1 percent at $26.1 billion, helped also by strong contributions from Brazil, Mexico and store growth in China.
“In almost every country we grew the top line faster than the market despite the strong dollar and a recession that is even deeper in some countries than it is in the United States,” said Chief Executive Mike Duke.
Including the impact of the stronger dollar, international operating income fell 16.2 percent to $880 million on an 11.1 percent drop in sales to $21.3 billion.
Wal-Mart, which employs more than 2 million people and makes just under a quarter of its sales outside the United States, said group earnings per share were broadly flat at 77 cents in the first quarter, in line with forecasts. [ID:nN14463262]
In the fourth quarter, international operating income rose 5.1 percent on sales up 9 percent at constant exchange rates.
Gross profit margins at the international business fell in the first quarter compared with the same period last year, due largely to the closure of six Sam’s Clubs stores in Canada and price cuts in Brazil and Japan.
Doug McMillon, chief executive of Wal-Mart International, also said the foreign businesses needed to improve their stock availability.
Like-for-like sales at Asda, Britain’s second-biggest grocer, accelerated for the fifth consecutive quarter to 8.4 percent, excluding fuel, for the three months ended March, up from 7.2 percent in the last quarter of 2008.
That topped a 3.4 percent rise in underlying sales from market leader Tesco (TSCO.L) for the first six weeks of its new financial year, and a 6.2 percent increase from J Sainsbury (SBRY.L), Britain’s third-largest grocer, for the 11 weeks to March 21. [ID:nLL127432] [ID:nLO249608]
Asda beat both its sales and profit targets for the quarter and grew profit ahead of, and costs below, sales.
Asda Chief Financial Officer Judith McKenna also told reporters the chain had “one of our strongest Easter trading periods for some time” in April, helped by demand for its budget Smart Price range, as well as strong sales of George clothing and in home shopping.
McKenna said sales growth might temper in the coming months as food price inflation eases, but noted sales volumes had been increasing at Asda in recent quarters.
In Mexico, same-store sales at Walmex rose 3.3 percent on a comparable week basis.
Wal-Mart said the outbreak of Swine Flu in April, which was centred on Mexico, did have an impact and would be shown in second-quarter figures.
In Brazil, sales rose 12.6 percent, driven by discount, cash and carry formats and new stores. Comparable store sales were slightly negative, due to the timing of Easter.
In China, comparable store sales were down 1.8 percent at Wal-Mart China and down 5.8 percent at Trust-Mart. (Editing by Dan Lalor and Rupert Winchester)