Despite a boost in sales, giant retailer Wal-Mart Stores Inc. reported fiscal third-quarter profit that fell short of Wall Street expectations, reflecting continued financial worries among its core low-income shoppers.
For the three months that ended Oct. 31, the nation's largest retailer reported a profit of $3.3 billion, or 96 cents a share, down 2.9%, or 95 cents, from $3.4 billion a year earlier. The results were 2 cents below analysts' expectations.
Wal-Mart executives said Tuesday that the retailer was focusing on keeping prices low to attract customers who remain thrifty and pessimistic about the U.S. economy.
Our shoppers "want to save money. They're juggling credit cards, using coupons and skipping restaurants and vacations," Wal-Mart Chief Executive Michael Duke said in a conference call. "There is a real sense that the economic strain is taking its toll."
The company's low-price strategy did boost sales 1.3% at U.S. Wal-Mart stores open at least a year, breaking a nine-quarter streak of sales declines for the chain's American stores. Same-store sales are an important measure of a retailer's health because they exclude the effect of store openings and closings.
The Bentonville, Ark., company stumbled over the last few years by removing thousands of products from its shelves in an attempt to de-clutter its stores. In April, the retailer reversed its decision and announced plans to expand its offerings by 8,500 items, or 11%, for an average store.
Looking forward to the holiday, Duke said the company would continue to emphasize competitive prices with a price-match guarantee, a layaway program and free online shipping options.
Wal-Mart forecast fourth-quarter earnings would range from $1.42 to $1.48 a share, up from $1.41 a year earlier, while its earnings guidance for the full year would be $4.45 to $4.51 a share, up from $4.18.
Wal-Mart shares fell $1.43, or 2.4%, to $57.46.