San Francisco: Wal-Mart Stores Inc reported a flat quarterly profit on Thursday as its low prices attracted shoppers amid a global economic slowdown, but the retailer’s results suffered from the stronger US dollar.
For the current quarter, the company forecast results roughly in line with Wall Street expectations as it faces tough comparisons with a year ago, when it got a boost from customers spending tax rebate cash in its stores.
Still, Wal-Mart said it would continue to gain market share as customers change shopping patterns and focus on value.
“This is not a short-term phenomenon,” chief executive Mike Duke said on a recorded call, referring to the boost in traffic it is seeing in its stores.
The world’s largest retailer earned $3.02 billion, or 77 cents per share, in the first quarter ended 30 April, compared $3.02 billion, or 76 cents per share, a year earlier.
Analysts on average had forecast earnings of 77 cents per share.
Wal-Mart has been gaining market share in the recession as shoppers head to its discount stores to take advantage of low prices on necessities, like groceries and toiletries.
But it had warned that currency exchange rates would hurt its quarterly results, and it said on Thursday that currency exchange rates reduced earnings by roughly 4 cents per share.
Sales fell 0.6% to $93.47 billion. Net sales increased 4.5% to about $98.31 billion on a constant currency basis, Wal-Mart said.
TRAFFIC UP IN ITS DISCOUNT STORES
Sales at Walmart stores in the United States rose 3.8% to $61.24 billion, while they declined 1.4% to $10.96 billion in Sam’s Club warehouse locations.
On a recorded call, vice chairman Eduardo Castro-Wright said a large part of the growth in the US discount stores was coming from new customers.
For the second quarter, Wal-Mart forecast earnings per share of 83 cents to 88 cents from continuing operations. Analysts had been expecting 85 cents.
A year ago, Wal-Mart got a boost in its second quarter from the US government’s economic stimulus package that distributed about $100 billion in tax rebates to 130 million households.
To entice shoppers to use their rebate dollars in its stores, Wal-Mart offered to cash the checks for free, and it cut prices on staple goods such as cereal and lunch meat.
Taking into account the lack of tax rebate checks this year, the company forecast US same-store sales to be flat to up 3% for the 13 weeks from 2 May through 31 July, which roughly tracks its second quarter.
Wal-Mart shares rose to $50.05 in premarket trading from Wednesday’s New York Stock Exchange close of $50.03.