Wal-Mart 3Q profit up, but cuts outlook
NEW YORK (AP) — Wal-Mart Stores says that its third-quarter profit rose 2.8 percent, but the world’s largest retailer reported a sales shortfall as its low-income shoppers feel squeezed around the globe.
The discounter also cut its outlook for the full year and issued fourth-quarter profit guidance that was below analysts’ projections.
Wal-Mart is considered an economic bellwether because the retailer accounts for nearly 10 percent of nonautomotive retail spending in the U.S. The latest results show that its American households with lower income are still struggling to juggle daily living costs with stagnant wages.
Against this background, Wal-Mart is raising up its game for the holiday shopping season, which accounts for anywhere from 20 percent to 40 percent of retailers’ annual revenues. Like other rivals, the discounter is kicking off the official start earlier into Thanksgiving. It also brought back its holiday layaway program and says it is sharpening prices on key holiday items even more than last year.
“The retail environment, both in stores and online, remains competitive,” said Mike Duke, president and CEO of Wal-Mart Stores Inc. in a statement.” Wal-Mart has aggressive plans to help our customer enjoy the holiday season.”
Wal-Mart said that it earned $3.74 billion, or $1.14 per share in the three-month period ended Oct. 31. That compares with $3.64 billion, or $1.08 per share, in the year-ago period.
Net sales rose 1.6 percent to $114.88 billion, up 1.6 percent in the year ago period.
Analysts were expecting earnings of $1.13 per share on net sales of $116.9 billion.
U.S. Wal-Mart stores, which account for 58 percent of the company’s total sales, posted the third straight quarter of declines in a key revenue figure after six consecutive quarters of increases. Revenue at stores open at least a year — considered an important measure of a retailer’s performance — fell 0.3 percent at Wal-Mart’s U.S. stores. Analysts were expecting the figure to be unchanged.
The overall figure was down 0.1 percent, including a 1.1 percent increase at Sam’s Clubs.
The company expects that figure to be unchanged for Wal-Mart’s U.S. stores for the fourth quarter.
Overall, total sales increased 2.4 percent for Wal-Mart’s U.S. business, 1.1 percent at Sam’s Clubs and 0.2 percent at Wal-Mart’s international business.
The company said that for the fourth quarter, it expects earnings per share to be in the range of $1.50 to $1.60. It said that results would be hurt by the company’s move, announced in late summer, to close 50 under-performing stores in Brazil and China.
The company expects adjusted earnings per share for the fourth quarter to be $1.60 to $1.70.
For the year, Wal-Mart now expects earnings per share to be from $5.01 per share to $5.11 per share. That compares with its forecast made in August of $5.10 and $5.30 per share. That was downgraded from May’s forecast.
Wal-Mart expects adjusted earnings per share for the full year to be $5.11 to $5.21.
Analysts expected adjusted earnings of $1.69 per share for the fourth quarter and $5.19 per share for the full year, according to FactSet.