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Wal-Mart profit up, says US consumers still wary

Wal-Mart profit up, says US consumers still wary
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First Published: Tue, Aug 17 2010. 05 17 PM IST
Updated: Tue, Aug 17 2010. 05 17 PM IST
Chicago: Wal-Mart Stores Inc. posted a drop in US same-store sales and said it would focus on curbing expenses to help boost profits this year as consumer sentiment remains soft.
The world’s largest retailer posted a higher-than-expected quarterly profit and raised its full-year forecast on Tuesday, helped by cost cuts and international growth.
Wal-Mart also signaled a departure from its strategy of offering steep discounts on select products in its US stores. The retailer said they did not help sales as much as expected and that in July it emphasized a wider array of what it calls “everyday low prices” to lure shoppers instead.
“The slow economic recovery will continue to affect our customers, and we expect they will remain cautious about spending,” Wal-Mart chief executive Mike Duke said in a statement.
Chief financial officer Tom Schoewe said the company raised its full-year profit forecast based on its strong operating performance in the first half of the year, adding that Wal-Mart would continue to curb expenses going forward.
Shares in the company rose 0.8% in pre-market trading.
Wal-Mart’s profit was $3.60 billion, or 97 cents a share, in the second quarter ended July 31. Analysts on average forecast 96 cents, according to Thomson Reuters
A year earlier, it posted a profit of $3.48 billion, or 89 cents a share.
Revenue rose 2.8% to $103.73 billion, below the average Wall Street forecast of $105.33 billion.
Sales at discount stores open for a year in the company’s key US market fell 1.8%. Same-store sales in that unit had fallen in each of the past four quarters.
Wal-Mart also raised its full-year earnings per share forecast to $3.95 to $4.05 a share from a previous forecast of $3.90 to $4. Analysts had forecast $3.99 per share.
The company expects third-quarter same-store sales, excluding fuel, to range between a decline of 2% and an increase of 1%.
Wal-Mart shares were up 39 cents to $50.80 in premarket trading.
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First Published: Tue, Aug 17 2010. 05 17 PM IST