Wal-Mart Drops After Second-Quarter Sales Trail Estimates
By David Welch on August 16, 2012
Wal-Mart Stores Inc. (WMT), the world’s largest retailer, dropped in New York trading after posting second-quarter sales that trailed analysts’ estimates amid slowing gains in the U.S.
Wal-Mart fell 3.2 percent to $72.05 at 7:34 a.m. The shares advanced 25 percent this year through yesterday.
Total revenue rose 4.5 percent to $114.3 billion, the Bentonville, Arkansas-based company said today in a statement. That trailed analysts’ $115.8 billion average estimate. Net income rose to $4.02 billion, or $1.18 a share, from $3.8 billion, or $1.09, a year earlier, Wal-Mart said. The average of 26 analysts’ estimates compiled by Bloomberg was $1.17 a share.
Chief Executive Officer Mike Duke has been cutting prices to lure shoppers seeking bargains amid the weakening U.S. economy. Second-quarter sales at U.S. Wal-Mart stores open at least a year gained 2.2 percent, slower than the 2.6 percent gain in the first quarter.
“The U.S. stores division has decent operating momentum, but expectations were high going into the quarter,” Colin McGranahan, an analyst with Sanford C. Bernstein & Co. in New York, said in a telephone interview before the results were released. He rates Wal-Mart market perform, the equivalent of a hold.
Wal-Mart said today that profit this year would be $4.83 to $4.93 a share, up from a previous forecast of $4.72 to $4.92. The average estimate (WMT) of 28 analysts was for profit of $4.93. Third-quarter profit per share will be $1.04 to $1.09. Analysts project $1.05.
Duke said consumers in the U.S. and in Wal-Mart’s key international markets are still struggling and will keep shopping for the lowest prices.
“Given continuing economic pressures, we believe that our price leadership and value are growing in importance to customers across income levels,” Duke said in the statement. “Walmart’s low prices drive greater customer loyalty.”
The company’s international operations (WMT) boosted sales 6.4 percent to $32 billion, and Sam’s Club sales climbed 3.8 percent to $14.2 billion.
Wal-Mart didn’t provide an update on the investigations by the U.S. Department of Justice and the U.S. Securities and Exchange Commission into possible violations of the Foreign Corrupt Practices Act. The government agencies are investigating allegations that Wal-Mart systematically bribed Mexican officials so it could more quickly open stores in the country.
Federal and local government agencies in Mexico also have started investigations of these matters, and the company has said it is cooperating with those probes as well.
Several of Wal-Mart’s shareholders have filed lawsuits against the company, current and former directors and officers and past and present officers of its Walmex unit. Wal-Mart’s board audit committee is conducting a probe as well.