Hey there, time traveller!
This article was published 15/11/2012 (1350 days ago), so information in it may no longer be current.
NEW YORK -- Wal-Mart Stores Inc. reported a nine per cent increase in net income for the third quarter, but revenue for the world's largest retailer fell below Wall Street forecasts as its low-income shoppers continue to grapple with an uncertain economy.
The discounter issued a fourth-quarter profit outlook that fell short of Wall Street expectations, and the company's stock price slid more than three per cent.
Walmart is considered an economic bellwether because the retailer accounts for nearly 10 per cent of non-automotive retail spending in the U.S. The company's latest results show many low-income Americans -- it's estimated typical Walmart customers have an average household income of between US$30,000 and $60,000, rent their homes and don't own stock -- continue to struggle even as the housing and stock markets are improving.
The disappointing revenue comes as Walmart, like other retailers, is preparing for the busy winter holiday shopping season in the U.S. next week. The period, which runs roughly from November through December, is a time when stores can make as much as 40 per cent of their annual revenue. Wal-Mart has said it plans to offer deeper discounts and a broader assortment of merchandise this year season to draw in shoppers.
"Macroeconomic conditions continue to pressure our customers," said Charles Holley, Wal-Mart's chief financial officer. "The holiday season is predicted to be very competitive but we are well-prepared to deliver on the value and low prices our customers expect."
The disappointing revenue results come a year after Walmart's U.S. namesake business turned a corner by re-emphasizing low prices and restocking stores with thousands of basic items it had gotten rid of in an overzealous bid to reduce clutter.
During the third quarter of last year, the division reversed nine straight quarters of declines in revenue at stores opened at least a year, which is considered a key measure of a retailer's health. The U.S. namesake business has recorded five consecutive quarters of gains since the division rebounded, including a 1.5 per cent increase in the third quarter.
But the third-quarter gain is just shy of the 1.8 per cent increase analysts polled by Thomson Reuters were expecting. It's also a slowdown in growth from the 2.2 per cent gain the business posted in the second quarter and the 2.6 per cent increase it had in the first quarter.
Analysts say Wal-Mart's previous results benefited from the increase in prices for some groceries due to inflation, a trend that is now subsiding. They also say Wal-Mart is facing tougher revenue comparisons from a year ago when its business first began to rebound.
Ken Perkins, president of research company Retail Metrics said Wal-Mart's revenue is headed in the right direction. He cautioned the company will need to continue to keep prices low in order to compete with rivals that have stepped up discounting.
"Overall, it's a relatively good report," he said. "But it shows that its consumer is still struggling."
Wal-Mart earned US$3.63 billion, or $1.08 per share, in the quarter ended Oct. 31. That compares with $3.33 billion, or 96 cents per share, in the year-ago period.
Separately, in a filing with the U.S. Securities and Exchange Commission, Wal-Mart said Thursday it was looking into potential violations related to the Foreign Corrupt Practices Act in Brazil, China and India. Wal-Mart initially began investigating its Mexico operations following a report in April that the retailer allegedly failed to notify law enforcement when company officials authorized millions of dollars in bribes in Mexico.
-- The Associated Press