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Wal-Mart Stores Inc. posted better-than-expected Q3 net income and revenue, and boosted its full-year outlook. Net income for the world's number-one retailer was $2.86 billion ($0.70/share), up from $2.65 billion ($0.63/share) last year. Quarterly sales were $91.95 billion, up from $84.47 billion. Analysts, on average, were expecting EPS of $0.67 on revenue of $91.67 billion. U.S. same-store sales were up 1.5% over the quarter; in August the company projected a 1-3% rise. The figure includes a 3.9% jump in same-store sales at Sam's Club, while comps at Wal-Mart's namesake stores were up just 1%. Wal-Mart Stores said it now anticipates Q4 earnings from continuing operations of $0.99 to $1.03 a share, equating to full-year EPS from continuing operations of $3.13 to $3.17. Analysts had been forecasting Q4 EPS of $1.02 and full-year EPS of $3.09. Wal-Mart estimates U.S. comparable-store sales will be flat to 2% higher for the fourth quarter. The results seemed to indicate Wal-Mart's heavy discounting during the quarter did not hurt its margins. "Both Wal-Mart Stores U.S. and Sam’s Club increased profits faster than sales," CEO Lee Scott said. "Our focus on managing inventory this quarter was very positive," (full earnings call transcript later today). During the quarter, Wal-Mart marked down 15,000 holiday items, 20% more than a year ago. "They've struggled with execution for quite a while, but now they're entering an environment where they certainly could excel, given their scale and price focus," money manager Peter Kwiatkowski remarked. Separately, Home Depot reported a 27% decline in net income and cut its full-year outlook, noting housing market indicators continue to deteriorate (full story). Wal-Mart shares are up 3.3% in pre-market trading.

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Source: Wal-Mart Beats Street; Heavy Discounting Succeeds