Wal-Mart sales disappoint as shoppers worldwide curb spending

Wal-Mart Stores has posted disappointing quarterly sales after shoppers worldwide proved cautious, prompting the discount retailer to lower its yearly revenue and profit forecasts.

"The retail environment was challenging across all of our markets," chief executive officer Mike Duke said.

Sales at stores open at least a year fell 0.3 per cent at Walmart US, the company’s biggest unit by far, while Wall Street analysts were expecting a 1 per cent gain.

Wal-Mart reported a 0.5 per cent decline in the number of visits from its US customers, who are still reeling from higher payroll taxes and gas prices as well as a shaky employment recovery.

The world’s largest retailer expects little improvement going into the autumn. It forecast flat US same-store sales in the current quarter, which began on August 1st and includes the important back-to-school season.

Things were also difficult outside the US. International sales rose 2.9 per cent, but that was not enough to lift the division's operating profit. The company said it had more work to do to control costs in those markets, which include Mexico, China, India, Canada and Britain.

Wal-Mart’s overall revenue increased 2.4 per cent to $116.2 billion in the second quarter ended July 31st, below the $118.47 billion analysts expected.

Wal-Mart now expects net sales to be up between 2-3 per cent for the fiscal year, down from an earlier forecast of a rise of 5 per cent to 6 per cent. The retailer also cut its profit forecast by 10 cents a share, to a range of $5.10 to $5.30.

Wal-Mart gets more than half of its revenue from groceries. The company blamed a slight drop in comparable sales in that category on lower- than-expected food inflation.

Wal-Mart said it had earned $4.07 billion, or $1.24 a share, in the second quarter, compared with $4.02 billion, or $1.18 a share, a year earlier. Excluding a non-income tax item, earnings were $1.25 a share, in line with estimates.– (Reuters)