Wal-Mart posts flat net, forecasts in-line results
SAN FRANCISCO (Reuters) - Wal-Mart Stores Inc reported a flat quarterly profit that met Wall Street expectations on Thursday as the stronger U.S. dollar offset increased sales from shoppers seeking deals in its stores amid a global economic slowdown.
For the current quarter, the world's biggest retailer forecast results roughly in line with analysts' expectations as it faces tough comparisons with a year ago, when it got a boost from customers spending tax rebate cash in its stores.
Its stock fell 2 percent as investors had expected the behemoth discounter, which has gained market share and new customers amid the recession, to surpass earnings estimates.
Still, analysts said Wal-Mart's results were impressive given the tough climate and show it is outpacing competitors like Target Corp and Costco Wholesale Corp, which have seen profits fall.
"As long as Wal-Mart continues to have the price leadership that they have and the store experience continues to improve from where it was a few years ago ... they'll keep many of these gains," said Barclays Capital analyst Robert Drbul.
Wal-Mart said profit was flat at $3.02 billion for its fiscal first quarter ended April 30, but on a per-share basis it earned 77 cents, up from 76 cents a year earlier.
Analysts on average had forecast earnings of 77 cents per share, according to Reuters Estimates.
Wal-Mart had warned that currency exchange rates would hurt its quarterly results, and it said on Thursday that currency reduced earnings by roughly 4 cents per share.
PROUD TO SHOP AT WAL-MART
Wal-Mart said customers have changed their shopping patterns, are focused on thrift and are now "proud" to tell their friends they shop at Wal-Mart.
"We believe the improvements we've made in merchandising, marketing and operations in the U.S. and around the world are sustainable," Chief Executive Mike Duke said on a recorded call. "This is not a short-term phenomenon."
In the quarter, sales fell 0.6 percent to $93.47 billion. Net sales increased 4.5 percent to about $98.31 billion on a constant currency basis, Wal-Mart said.
Sales at Walmart stores in the United States rose 3.8 percent to $61.24 billion, while they declined 1.4 percent to $10.96 billion in Sam's Club warehouse locations.
A large part of the growth in the U.S. discount stores is coming from new customers, with traffic at existing stores up to levels Wal-Mart has not seen in "several years," Vice Chairman Eduardo Castro-Wright said on the recorded call.
"Clearly declining gas prices compared to last year have had a role in driving traffic to our stores, but more important is the growing consumer need for value today," he said. Continued...
