Chicago: Wal-Mart Stores Inc posted quarterly results that beat Wall Street expectations, but said second-quarter earnings could fall short of Wall Street estimates as its shoppers remain under pressure.
Wal-Mart’s US discount stores have lost sales to competitors in recent months as consumers renew shopping for discretionary items like clothes and home furnishings, rather than focusing on low-priced essentials that helped boost Walmart stores during the recession.
The world’s largest retailer said on Tuesday that its customers are still hurt by persistently high unemployment rates and concerns about their future financial health.
“Our customers, particularly in the United States, are still concerned about their personal finances and unemployment, as well as higher fuel prices,” Wal-Mart chief executive Mike Duke said in a statement. “Our commitment to reducing prices and managing expenses positions us well across the retail landscape.”
Within minutes of reporting results, Wal-Mart also announced a new onslaught of price cuts on groceries, offering an average discount of 30% for a basket of 22 top food and household products. Shares of the company rose 1.5% to $53.50 premarket.
Wal-Mart reported earnings of $3.32 billion, or 88 cents a share, for the fiscal first quarter ended 30 April. That compares with $3.03 billion, or 77 cents a share, a year earlier and came in ahead of the 85 cents per share expected by analysts, according to Thomson Reuters.
US sales at discount stores open at least a year, a key measure of a retailer’s business, fell 1.4%. Analysts on average had forecast a 0.6% drop as of Monday, according to Thomson Reuters. In February, Wal-Mart forecast those sales at down 1% to up 1%.
Wal-Mart’s Asda unit in Britain also posted a drop in quarterly underlying sales for the first time in four years.
Wal-Mart said it expected second-quarter earnings per share of 93 cents to 98 cents from continuing operations. Analysts had predicted earnings of 98 cents per share.
The company sees US same-store sales, excluding fuel, to be up 1% to down 2% in the second quarter.