Home >Companies >Wal-Mart forecast misses estimates as sales slump persists

New York: Wal-Mart Stores Inc, the world’s largest retailer, forecast second-quarter profit that missed analysts’ estimates as the company copes with slow store traffic in the US and high operating costs overseas.

Earnings will be $1.15 to $1.25 a share this quarter, the Bentonville, Arkansas-based company said on Thursday in a statement. Analysts had projected $1.28, the average of estimates compiled by Bloomberg. Sales in the fiscal first quarter ended 30 April also were lower than analysts’ estimates.

Chief executive officer Doug McMillon, who took the post in February, has been trying to revive Wal-Mart’s US same-store sales growth after lower food-stamp payments and struggles to keep shelves fully stocked contributed to a decline. Wal-Mart said in February it was increasing its capital spending by $600 million more than previously projected for the year in order to add more Neighborhood Market and Express stores. Those smaller- format outlets have outperformed its supercenters.

While we like the shift in focus, we’d like to see an even more aggressive approach, Patrick McKeever, an analyst for MKM Partners, said in a note before the results were released. He ha a neutral rating on the shares.

Wal-Mart fell as much as 3.2% to $76.20 in early trading in New York. The shares were little changed this year through yesterday, trailing a 2.2% gain for the Standard & Poor’s 500 Index.

First-quarter net income fell 5% to $3.59 billion, or $1.11 a share, from $3.78 billion, or $1.14, a year earlier, the company said. Excluding some items, profit was $1.10 a share. The average analyst estimate compiled by Bloomberg was $1.15.

Total revenue increased 0.8 % to $115 billion in the quarter. Analysts had projected $116.3 billion. Sales at Wal- Mart US stores open at least 12 months excluding fuel fell 0.2%. Analysts had expected the sales to be unchanged. BLOOMBERG

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