Wal-Mart suffers sales decline in key quarter

By Parija Kavilanz, senior writer


NEW YORK (CNNMoney.com) -- Wal-Mart Stores posted a quarterly profit Thursday that beat Wall Street's expectations, but the retailer's store sales dropped during the period that included the all-important year-end holiday sales.

Wal-Mart, the world's largest retailer, said fourth-quarter sales at its stores open at least a year - a key gauge of retailers' performance known as same-store sales - fell 1.6% compared to a 2.4% increase for the same period a year ago.

For the full year, Wal-Mart (WMT, Fortune 500) said its same-store sales were flat compared to a 2.8% increase last year.

"I am disappointed that [our] U.S. comparable sales were below expectations in the quarter," Wal-Mart CEO Mike Duke said during a pre-recorded call to discuss the company's results.

"The economy is a real challenge for many of our customers," he added, warning that Wal-Mart's first-quarter sales "will be difficult" due to tougher year-over-year sales comparisons and ongoing price deflation in some of its key merchandise categories including food and electronics.

"We believe we will see improvements as the year progresses," Duke said in the call.

Fewer shoppers

Wal-Mart, which averages more than 100 million shoppers to its stores every week, is often seen as a barometer of the state of consumer spending.

Therefore its sales decline will likely raise concerns that consumers still aren't shopping freely. That's a troubling sign, given that consumer spending fuels two-thirds of the nation's economic activity.

Eduardo Castro-Wright, vice chairman of Wal-Mart stores, said during the call that the same-store sales decline was fueled by a "slight drop in [customer] traffic to Wal-Mart stores in the fourth quarter" as well as a decline in the total value of purchases that customers were making at Wal-Mart.

Grocery and consumer electronics were impacted the most by price deflation while sales of health and wellness, and pharmacy products were strong, said Castro-Wright.

Wal-Mart said it expects same-store sales to be flat to "plus or minus 1%" in its first quarter.

At the company's Sam's Club division, same-store sales rose a slight 0.7% in the quarter and were up 1.4% for the full year.

Wal-Mart said it expects same-store sales at its warehouse club division to also be "flat, plus or minus 1%" in the first quarter as membership renewal rates continue to be flat.

Wal-Mart's international operations - including Brazil and China - delivered the best performance in the quarter. The company said Wal-Mart International ended fiscal year 2010 with more than $100 billion in net sales and "strong double-digit sales growth" in the fourth quarter.

By the numbers

The retailer said profit climbed to $4.7 billion, or $1.23 a share, during its fourth-quarter ended Jan. 31.

Excluding certain one-time charges, Wal-Mart reported earnings of $1.17 per share. Analysts polled by Thomson Reuters, who typically strip out one-time charges, were expecting a profit of $1.12 a share for the three months ended Jan. 31.

Sales at Wal-Mart increased 4.6% to $112.8 billion during the quarter. Analysts expected revenue to climb 5% to $114.4 billion.

For the full year, Wal-Mart reported an 8.8% jump in profit to $14.4 billion, and sales rose 1% to $405 billion.

The Bentonville, Ark.-based company expects to earn between 81 cents and 85 cents per share for the current quarter, while analysts expect the company to earn 85 cents per share.

For the full fiscal 2011 year, Wal-Mart expects to earn between $3.90 and $4.00 per share compared to analysts' current estimate of $3.97 per share for the year.

Shares of Wal-Mart (WMT, Fortune 500) declined less than 1% in pre-market trading.

--CNNMoney.com staff writer Hibah Yousuf contributed to this report. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,430.21 5.36 0.03%
Nasdaq 4,102.55 16.32 0.40%
S&P 500 1,867.16 4.85 0.26%
Treasuries 2.72 0.08 3.19%
Data as of 3:34pm ET
Company Price Change % Change
Bank of America Corp... 16.22 0.09 0.58%
Facebook Inc 59.30 -0.42 -0.70%
General Electric Co 26.72 0.59 2.28%
Micron Technology In... 23.95 1.47 6.53%
Cisco Systems Inc 23.24 0.20 0.89%
Data as of 3:19pm ET
Sponsors

Sections

New service lets anyone transfer money up to $900 from one Walmart to another in the U.S. for a fee of $9.50. More

Obama's proposed budget would raise $1.4 trillion more revenue and increase noninterest spending by $446 billion more than current policies, the CBO said in a new analysis. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.