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Wal-Mart Challenged By Oil Price Hikes

Posted on: Thursday, 18 August 2005, 09:00 CDT

Wal-Mart challenged by oil price hikes

LONDON, Aug. 17 (Xinhua) -- Wal-Mart, the world's leading retailer, sounded its alarm over the impact of rocketing oil prices on the low-income consumers, its core customers.

"The only real economic concern I have is that oil prices will erase improvements in employment and real income for a portion of our customer base...an important portion of our customer base, " Lee Scott, chief executive of Wal-Mart was quoted by the Financial Times

Wal-Mart's cautious outlook for the coming quarter, combined with sluggish second quarter results to send its share price down more than 3 percent in early trading, to 47.52 US dollars, the Financial Times said in a story published on Wednesday.

The company said that the second-quarter earnings rose 5.8 percent to 2.8 billion US dollars or 67 cents per share, while sales increased 10.2 percent to 76.8 billion dollars.

In spite of the threat to the spending power of its customers posed by fuel costs, Scott said that inflation "appears to be well under control."

It is also noted that the higher fuel costs meant the company'trucking fleet -- the biggest in the United States -- had spent an additional 30 million dollars moving goods to its stores during the quarter.

The costs of providing light and power to its network of more than 3,500 stores in United States had increased by more than 100 million dollars.

Source: Xinhua News Agency - CEIS

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