Wal-Mart Stores Inc on Thursday reported lower-than-expected quarterly sales at established US stores, citing declining food prices and warmer-than-usual temperatures that curbed demand for seasonal items. Shares of Wal-Mart, the world's largest retailer, fell 4.1 percent as investors shrugged off strong online sales growth and a smaller-than-expected decline in earnings.
Burt Flickinger, managing director of retail consultancy Strategic Resources Group, said investors should be more patient as Wal-Mart has taken the right steps to fix its business by raising workers' hourly wages, improving operations with cleaner stores and focusing on increasing e-commerce sales. Wal-Mart raised the low end of its fiscal-year profit forecast, in line with Target Corp and other rivals that expressed optimism ahead of the holiday shopping season.
Chief Financial Officer Brett Biggs said declining prices for eggs and other important products for a food retailer remained challenging, and unseasonably warm weather hurt sales in the back half of the quarter. Wal-Mart's sales at US stores open at least a year rose 1.2 percent, excluding fuel price fluctuations, in the third quarter ended on October 31. That was weaker than market expectations of a 1.3 percent rise, according to research firm Consensus Metrix.
Comparable food sales fell 1.5 percent, versus a 1 percent decrease in the second quarter. US store visits rose 0.7 percent, slowing from increases of 1.7 percent a year earlier and 1.2 percent in the second quarter. Net income attributable to Wal-Mart fell more than 8 percent to $3.03 billion, or 98 cents per share, from $3.3 billion, or $1.03 per share, a year earlier. Analysts on average expected 96 cents per share, according to Thomson Reuters I/B/E/S.
Net sales rose 0.5 percent to $117.2 billion. Online sales increased 20.6 percent, accelerating from the previous quarter. That business added 50 basis points to third-quarter comparable sales, its biggest contribution to date. International sales fell 4.8 percent, hurt by a strong dollar and continued weakness in the UK market, but they were up 2.4 percent on a currency-neutral basis.
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