Wal-Mart sales drop in holiday quarter

Full-year forecast made by the world’s largest retailer could not match estimates given by the analysts.

“I am disappointed that [our] U.S. comparable sales were below expectations in the quarter,” said Mike Duke, chief executive of Wal-Mart.

Figures let Wal-Mart down
U.S. same-store sales dropped 1.6 percent in the three months ended Jan. 31, said the Bentonville, Arkansas-based retailer. The company had projected a fall of no more than 1 percent.

Overall sales, including the company’s overseas businesses, went up 4.6 percent to $112.8 billion. Net profit climbed 22 percent to $4.63 billion from $3.79 billion in the year-ago period.

Earnings per share, apart from a charge of 4 cents per share for restructuring and a tax benefit of 10 cents a share, were reported to be $1.17. Analysts, according to Thomson Reuters, had projected earnings of $1.12 per share.

According to Eduardo Castro-Wright, vice chairman of Wal-Mart stores, the drop in the same-store sales was fueled by a “slight drop in [customer] traffic to Wal-Mart stores in the fourth quarter.”

The retailer endeavored to pull up on sales by cutting down the prices of laptop computers, along with turkeys and cranberry sauce for holiday meals, but could not benefit much as the demand was slowed down by job losses.

Meek projection for first quarter
As the economy tries to recover, consumer spending may improve, but Wal Mart thinks it may have to struggle with sales in the first quarter. The retailer has predicted that same-store sales, excluding fuel, will be flat, with a variation of 1 percent up or down in the present quarter.

“U.S. sales will be more challenging in the first quarter, as Walmart U.S. cycles through strong year-over-year comparisons and deflation,” said Mike Duke.

However, the company hopes to perform better in the remaining quarters this year. "We remain focused on growing top-line sales, and expect improvement in the United States as the year progresses,” said Duke.

The company has projected earnings between 81 cents and 85 cents per share for the current quarter, while analysts have estimated earnings of 85 cents per share.

For the full fiscal 2011 year, Wal-Mart has forecast earnings between $3.90 and $4.00 per share; analysts' projected earnings of $3.97 per share for the year.