On Air Now

Tune in to Listen

93.9 FM Hibbing, MN

Weather

Current Conditions(Hibbing,MN 55746)

More Weather »
67° Feels Like: 67°
Wind: NW 3 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Today

Mostly Sunny 76°

Tonight

Clear 51°

Tomorrow

Sunny 79°

Alerts

  • 0 Severe Weather Alerts
  • 0 Cancellations

Wal-Mart sales disappoint as U.S. shoppers curb spending

The Wal-Mart company logo is seen outside a Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas June 6, 2013. REUTERS/R
The Wal-Mart company logo is seen outside a Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas June 6, 2013. REUTERS/R

By Phil Wahba and Lisa Baertlein

(Reuters) - 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 long-term growth.

Shares of Wal-Mart were down 2.4 percent at $74.59 in midday trading.

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 I/B/E/S.

Visits to those stores also fell 0.5 percent during the quarter.

"That low-income customer is really struggling now, and that's hitting Walmart," Edward Jones analyst Brian Yarbrough said.

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.

(Reporting by Phil Wahba in New York and Lisa Baertlein in Los Angeles; Additional reporting by Jessica Wohl in Chicago; Editing by Lisa Von Ahn)

Comments