Wal-Mart forecast trails estimates as sales slip

Wal-Mart Stores, the world’s largest retailer, forecast profit this year that trailed analysts’ estimates as the sluggish US economy and government benefit cuts threaten to restrain sales. Profit per share in the year through January 2015 will be $5.10 to $5.45, the Bentonville, Arkansasbased company said on Thursday in a statement. The average of 28 analysts' estimates compiled by Bloomberg was $5.55 a share.

Chief executive officer Doug McMillon, who took the post earlier this month, is trying to revive Wal-Mart's US same- store sales growth after lower food-stamp payments, higher taxes and struggles to keep shelves fully stocked contributed to four straight quarterly declines. Chief financial officer Charles Holley said Thursday that the economic trends, as well as higher health care costs, will continue to hurt the domestic business.

“They continue to be pressured by the low-income consumer,” Brian Yarbrough, an analyst at Edward Jones & Co in St. Louis, said Thursday in an interview.

“I don't see that changing.” Wal-Mart fell 2.1% to $73.30 at 9:36 am in New York. The shares dropped 4.9% this year through yesterday, compared with a 1.1% decline for the Standard & Poor's 500 Index.

Fourth-Quarter Profit

Fourth-quarter net income fell 21% to $4.43 billion, or $1.36 a share, from $5.61 billion, or $1.67, a year earlier, the company said Thursday. Excluding some items, profit was $1.60 a share. The average of 22 analysts' estimates compiled by Bloomberg was $1.59. Revenue increased 1.5% to $129.7 billion in the quarter ended January 31. Analysts projected $130.2 billion.

Sales at Wal-Mart US stores open at least 12 months excluding fuel fell 0.4%. Wal-Mart increased its dividend 2.1 % to $1.92 a share for its fiscal 2015. The first quarterly payout will be on April 1 to shareholders of record as of march 11. Earnings per share in the current quarter will be $1.10 to $1.20, Wal-Mart said. Analysts projected $1.24, the average of 20 estimates compiled by Bloomberg.

US comparable-store sales have fallen in the first two weeks of February because of winter storms that closed more than 200 stores at their peak, Bill Simon, Wal-Mart US CEO, said in the statement.

Wal-Mart will accelerate the expansion of its smaller- format Neighborhood Market and Walmart Express stores this year, opening 270 to 300 of the locations this year, almost doubling its fleet, Simon said. The faster growth will boost capital spending to $12.4 billion to $13.4 billion for the year, $600 million more than the company previously projected, Wal-Mart said.