Wal-Mart Gets British Boost

Bumper takings at Britain's Asda supermarkets helped the world's biggest retailing group, Wal-Mart, beat US economic blues with a 5.8% rise in underlying annual profits to $12.8bn (£6.6bn).

Asda beat its sales and profits targets for the year to January with like-for-like revenue up in the "mid-single digits", according to its Arkansas-based owner.

"Asda was a winner in the UK, being the fastest growing of the four big retailers," said Mike Duke, Wal-Mart's head of international operations. "In fact, Asda achieved above-market growth every single month this year."

Britain accounts for more than half of Wal-Mart's overseas operations, which provided a backstop against weakening domestic takings for the cut-price retailer.

In the final quarter of the year, Wal-Mart's overall profits rose by 4% to $4.1bn and like-for-like sales growth edged up 1.7% â€" figures that indicate a slowing US trend over recent months.

Sales in the fourth quarter rose to $106bn at group level, up from $98bn a year ago. Sales in its international division jumped almost 19% to $27bn.

Chief executive Lee Scott said: "No one has a crystal ball to look into the economic future but we know the economy will be a critical factor this year."

He warned that some customers are "a little cautious" about spending, despite swingeing price cuts of up to 30% on food, medicines, fitness equipment and electronics that Wal-Mart described as its "economic stimulus" package, mirroring the US government's recent tax rebates.

With 1.9m staff globally, Wal-Mart operates 4,000 stores in the US and 2,900 elsewhere.

The company has been striving to improve its ethical image through a series of eye-catching environmental initiatives, although it is still the subject of wrath from workers' rights groups because of its hard line opposition to trade unions.

Wal-Mart's shares edged up 36 cents to $49.80 in New York on the news. Along with cut-price rivals such as Costco and Target, the firm has suffered less severely from the credit crunch than mid-market retailers. But with a recession on the cards, many economists believe that virtually all mainstream traders will be dragged into the malaise.

Wal-Mart warned that sales in US stores which have been open at least a year are expected to be flat or rise no more than 2% this quarter, given the "challenging" economic environment.

It also forecast that first-quarter earnings could fall below Wall Street expectations.

Asda has been expanding its online operation in an effort to close the gap behind Britain's market leader, Tesco. It expects its delivery service to cover 95% of the country by the end of the year.

There was a word of warning for suppliers from Asda's chief executive, Andy Bond, who said the possibility of a trickier 2008 would mean pressure to keep costs down."We, along with other retailers, have a responsibility to keep a lid on inflation," said Bond. "We will continue to be the undisputed price leader in the UK, aggressively rolling back prices by focusing on reducing our costs. We will also be challenging our suppliers to do the same."