By Phil Wahba and Lisa Baertlein
Aug 15 Wal-Mart Stores Inc reported a
surprise decline in quarterly same-store sales in the United
States, its biggest market, after shoppers came in less often
because higher taxes and gasoline prices were leaving them with
less spending money.
The world's largest retailer also cut its revenue and profit
forecasts for its fiscal year, raising concerns about retail
spending as the all-important holiday season nears. It cited
weak results from the United States, as well as Canada, Mexico,
Japan and other international markets that it is relying on for
Shares of Wal-Mart were down 2.4 percent at $74.59 in midday
U.S. sales at stores open at least a year at the company's
main Walmart chain fell 0.3 percent in the second quarter ended
in late July, the company said on Thursday. Wall Street analysts
were expecting a 1 percent gain, according to Thomson Reuters
Visits to those stores also fell 0.5 percent during the
"That low-income customer is really struggling now, and
that's hitting Walmart," Edward Jones analyst Brian Yarbrough
Shoppers are contending with higher payroll taxes after a
two-year cut ended in January, as well as high gas prices and a
slow recovery in employment.
Wal-Mart's results came a week after a group of U.S.
retailers reported modest gains in July same-store sales because
they had to resort to bargains to lure shoppers who remained
careful of their spending.
LITTLE IMPROVEMENT SEEN
Wal-Mart expects little improvement going into the fall. It
forecast flat U.S. same-store sales in the current quarter,
which includes the back-to-school season. Back-to-school is
often seen as a barometer for the holiday period, when retailers
get about 30 percent of sales and 40 percent of profits.
Wal-Mart now expects overall sales to be up between 2
percent and 3 percent for the fiscal year, down from an earlier
forecast of a rise of 5 percent to 6 percent. The retailer also
cut its profit outlook by 10 cents per share, to a range of
$5.10 to $5.30.
"The retail environment was challenging across all of our
markets," Chief Executive Officer Mike Duke said in a recording.
Second-quarter profit rose 1.3 percent to $4.07 billion, or
$1.24 per share. Excluding a tax-related charge, earnings were
$1.25 per share, in line with Wall Street estimates.
Revenue increased 2.4 percent to $116.2 billion, below the
$118.47 billion analysts expected.
International sales rose 2.9 percent, not enough to lift the
division's operating profit. The company said it had more work
to do to control costs in those markets.
Wal-Mart's international operating income fell 1.3 percent.
Comparable sales in Canada, Mexico, Japan and Britain fell,
while they rose slightly in Brazil and China.
Same-store sales rose 1.7 percent at the company's Sam's
Club chain, where shoppers did not balk at an increase in
membership fees in May. Still, Sam's Club's same-store sales
lagged those of rival Costco Wholesale Corp.
In 2011, Wal-Mart began a probe into alleged violations of
the U.S. Foreign Corrupt Practices Act and whether it had
handled such matters appropriately.
The situation drew public attention in April 2012 when the
New York Times reported that management at Wal-Mart de Mexico
SAB de CV had orchestrated bribes of $24 million to
help it grow quickly in the last decade and that the U.S.
parent's top brass had tried to cover it up.
Wal-Mart said it had spent $82 million on the probe in the
second quarter, after forecasting spending of $65 million to $70
million back in May.