Chicago: Wal-Mart Stores Inc posted its seventh consecutive quarterly drop in sales at existing US stores and said it will take some time to turn around sales in that unit.
The world’s largest retailer has struggled with pricing as it has lost customers to dollar stores while it also is still recovering from a poorly executed decision, since reversed, to pare down the number of items it offered.
“Some of the pricing and merchandising issues in Walmart ran deeper than we initially expected, and they require a response that will take time to see results,” Wal-Mart CEO Mike Duke said in a statement, using the style Wal-Mart uses for its US discount stores.
The results and comments about future sales were in contrast to company optimism in the fall, when Wal-Mart said fourth-quarter same-store sales at its namesake US stores should rise, even though its official forecast suggested a decline of 1% to a rise of 2%.
“At the analyst day in October, Mike Duke made it very clear they were going to do a positive comp this quarter in Walmart US and clearly (they) did not do that, so that was a disappointment,” said Telsey Advisory Group analyst Joseph Feldman
The company forecast US same-store sales in the current first quarter to be down 2% to flat.
While Wal-Mart has expanded into more than a dozen countries and is ripe for further international growth, the US stores still represent the lion’s share of its business. More than 62% of its $418.95 billion in fiscal 2011 sales came from the US discount stores, and sales in the unit are key to pleasing Wall Street.
Wal-Mart shares fell 1.3% to $54.65 in premarket trading, as the disappointing US sales overshadowed earnings that beat analysts expectations.
Wal-Mart earned $5.02 billion, or $1.41 per share, in the fourth quarter ended on 31 January, up from $4.82 billion, or $1.26 per share, a year earlier.
Excluding one-time items, earnings were $1.34 a share, compared with the analysts’ average estimate of $1.31, according to Thomson Reuters.
Sales overall rose 2.5% to $115.6 billion, short of analysts’ expectations of $117.7 billion. Sales at US stores open at least a year fell 1.8%