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Wal-Mart profits go up though sales decline

by Jorge Hernandez on November 16, 2010

Though sales have declined amid low consumer confidence, Wal-Mart announced an increase in quarterly profit on Tuesday.

The world's largest retailer made a third-quarter profit of nearly $3.5 billion, up 9.3 percent from last year, reports the Wall Street Journal. Sales, however, fell by 1.3 percent, having declined for the sixth quarter in a row.

The retailer largely relied on expansion and budget cuts to boost their earnings, while their "missteps in terms of merchandise selection and promotion" have caused its sales to suffer, says Reuters.

Though some of the drop in sales is due to factors out of the company's control – such as high unemployment rates – Wal-Mart's executive management expects sales to improve as the holiday season approaches.

Besides working to offer low prices, the company announced last week that they would offer free shipping on many of their online products, reports the Journal.

Bill Simon, head of US operations, told the Wall Street Journal that Wal-Mart is "in a position of strength for the busiest and most critical season of the year."

Wal-Mart CEO Mike Duke stated that "Wal-Mart U.S. will be the price leader this holiday season" and that he was "confident about improving comp trends for the fourth quarter," according to Reuters. The company expects anywhere between a 1 percent drop and a 2 percent growth in sales next quarter.

According to the news source, Wal-Mart's Sam's Club chain saw a 2.7 percent increase in sales, however, after attracting more membership by improving the quality of their merchandise. Duke told the news provider that he expects prolonged progress with the warehouse chain.

Some of Wal-Mart's competitors, such as Target, have actually seen improved sales, however.

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