Wal-Mart tops profit forecasts
Wal-mart reported improved customer traffic and an uptick in a key sales figure for the third quarter, even as a stronger dollar pressured its performance overseas.
The world's largest retailer also issued a forecast for the holiday shopping season that largely topped Wall Street expectations, and narrowed its full-year outlook after cutting it in August.
Wal-Mart has been pressured on a number of fronts this year. The company, based in Bentonville, Arkansas, is facing increasing competition from online retailers like Amazon.com and dollar stores, and its profits have been squeezed by pay raises for workers and a strong US dollar that has dampened sales from overseas.
In the United States, the company is also trying cleanliness and service. Greg Foran, CEO of the US division, said during a call with reporters Tuesday that customers are telling the company they're seeing improvement in the stores.
During the quarter, the company said sales at stores open at least a year rose 1.5 per cent, marking the fifth straight quarterly increase. But the increase was driven by higher traffic, while average spending per visit dipped. This figure is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.
For the fourth quarter, which includes the key holiday shopping season, Wal-Mart said it expects sales at established locations to rise one per cent. Foran declined to say how much that would be driven by increased traffic, versus higher spending. But he expressed confidence in the company's holiday plans.
"We're feeling good about what we're pulling together," Foran said.
Sales in Wal-Mart's international segment, meanwhile, fell 11 per cent to US$29.81 billion. Excluding the impact of currency fluctuations, sales were US$34.7 billion.
For the quarter ended October 31, Wal-Mart Store's net income fell 11 per cent to US$3.3 billion. But its earnings of US$1.03 per share topped Wall Street expectations for 97 cents per share, according to Zacks Investment Research.
Revenue slipped to US$117.42 billion from US$119 billion. On a constant currency basis, revenue was US$122.4 billion. Wall Street expected US$117.82 billion.
Wal-Mart also narrowed its forecast for full-year earnings to a range of US$4.50 to US$4.65 after cutting that outlook in August to US$4.40 to US$4.70 per share. Analysts expect, on average, US$4.50 per share, according to FactSet.
The retailer also said it expects fourth-quarter earnings to range between US$1.40 and US$1.55 per share. Analysts forecast, on average, US$1.42 per share. Wal-Mart's shares rose US$1.69, or 2.9 per cent, to US$59.56 in morning trading.
Wal-Mart shares have decreased 33 per cent since the beginning of the year, while the Standard & Poor's 500 index has stayed nearly flat. The stock has declined 30 per cent in the last 12 months.