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Wal-Mart trims earnings forecast as economy restrains shoppers
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Wal-Mart Stores yesterday said its third-quarter profit rose 2.8 percent, but the world’s largest retailer saw a sales shortfall as its low-income shoppers feel squeezed around the globe.
The discounter also cut its outlook for the full year.
Wal-Mart is considered an economic bellwether because the retailer accounts for nearly 10 percent of non-automotive retail spending in the US. The results show 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 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 said it is sharpening prices on key holiday items even more than last year.
“The retail environment, both in stores and online, remains competitive,” Mike Duke, president and CEO of Wal-Mart Stores Inc, said in a statement. “Wal-Mart has aggressive plans to help our customers enjoy the holiday season.”
Wal-Mart said it earned US$3.74 billion, or US$1.14 per share in the three months ended on October 31. That compares with US$3.64 billion, or US$1.08 per share, in the year-ago period.
Net sales rose 1.6 percent to US$114.88 billion, up 1.6 percent in the year-ago period.
Analysts were expecting earnings of US$1.13 per share on net sales of US$116.9 billion.
US 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 fell 0.3 percent at Wal-Mart’s US stores. 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 flat for Wal-Mart’s US stores for the fourth quarter.
The company expects earnings per share for the fourth quarter to be in the range of US$1.50 to US$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.
For the year, Wal-Mart expects earnings per share to be from US$5.01 to US$5.11. That compares with its forecast made in August of US$5.10 and US$5.30.
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