Wal-Mart Stores Inc. (Bentonville, AK, U.S.), the world's largest retailer, posted a 13-percent increase in third-quarter earnings, but narrowly missed Wall Street expectations and indicated earnings for this quarter could also be below current estimates.
It was the first time that the retailer missed the consensus Wall Street forecast since October 1996, according to Thomson First Call. Its shares fell more than 3 percent in midday trading.
The retailer earned U.S. $2.03 billion, or $0.46 per share, in the 3 months ended Oct. 31, compared with earnings of $1.8 billion, or $0.41 per share, a year ago. Analysts surveyed by Thomson First Call forecast Wal-Mart would earn $0.47 a share for the latest period.
Wal-Mart also reported its first decline in gross profit margins in 8 quarters. Revenue rose to $62.48 billion from $55.24 billion a year ago. The latest revenue figures were above the $62.34 billion expected by analysts. Sales at U.S. stores open at least a year were up 6.1 percent for the quarter, including a 5.7 percent comparable store increase for Wal-Mart Stores and 8 percent for Sam's Club wholesale outlets. Comparable store sales are considered a good indicator of retail health.
Domestic Wal-Mart stores, including Supercenters, boosted operating profit to $2.967 billion in the quarter, up 10.9 percent from the same period last year.
Wal-Mart President and CEO Lee Scott said the retailer's rapidly expanding international stores and its Sam's Club stores were notably strong. Profit in the international segment rose 28.5 percent to $564 million in the latest quarter versus a year ago. Profit from Sam's Club warehouses was up 12.5 percent at $270 million.
Wal-Mart officials said in a Nov. 13 pre-recorded earnings call that it is still seeing a cautious customer buying the lowest-price goods and timing their spending around the receipt of their paychecks.
"Wal-Mart seems to be stuck between a cautious consumer and rising costs," said Gary Balter, an analyst at UBS Investment Research, during this call. He noted that the retailer is not able to get customers to trade up to items on which the retailer makes higher profits.
Meanwhile, while management continues to control expenses through labor management and less bonus accruals, it is struggling with increasing insurance and utility costs, Balter said in a report, released Thursday.
As of Oct. 31, Wal-Mart had 3,499 domestic stores and 1,336 international units.
For the first 9 months of the year, Wal-Mart earned $6.33 billion, or $1.44 per share, up from $5.45 billion, or $1.22 per share, in the same prior year period.
Revenue for the first 9 months of the year rose to $181.8 billion from $163.2 billion a year earlier.
For the fourth quarter, Wal-Mart projects earnings to be in the range of 63 cents to 65 cents a share. Analysts expect 65 cents a share.
Wal-Mart expects earnings for the year to be $2.03 to $2.05 per share, from the original estimates of $2.00 to $2.05. Analysts expect $2.05 per share. (Associated Press)
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