Wal-Mart reports first profit fall in a decade

ARKANSAS: Wal-Mart Stores, the world’s biggest retailer, reported the first decline in profit in more than a decade on costs to sell its German unit. Sales increased less than analysts estimated.

Second-quarter net income dropped 26% to $2.08 bn, or 50 cents a share, compared with $2.8 bn, or 67 cents, a year earlier, the company said today. Revenue in the three months through July 31 rose 11% to $85.4 bn.

Sales at US stores open more than a year rose 1.7% in the quarter. Bentonville, Arkansas-based Wal-Mart lost money in Germany amid stagnant consumer spending and competition from discounters including Lidl. Its Asda unit in the UK is struggling with competition from Tesco, while US growth trails that of Target.

The company was “quite honestly disappointed with sales performance in our US stores,” chief executive officer H Lee Scott said on a recorded call. “Customers tell us that they are most concerned about gas prices.”

Wal-Mart shares fell 55 cents to $44.55 at 1:03 pm in Frankfurt trading. The stock lost 3.6% this year through yesterday, trailing the 1.6% gain on the Standard & Poor’s 500 Index.

For the third quarter, the company forecast profit from continuing operations of 59 cents to 63 cents a share, while analysts in a Thomson Financial survey were looking for 63 cents on average.

For the full year, Wal-Mart maintained its projection of $2.88 to $2.95 a share. The last time Wal-Mart’s net income fell was the fourth quarter of fiscal ’96.