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 17,804.80 26.65 0.15%
Nasdaq 4,765.38 16.98 0.36%
S&P 500 2,070.65 9.42 0.46%
Treasuries 2.18 -0.03 -1.27%
Data as of 2:15am ET
Company Price Change % Change
Bank of America Corp... 17.62 0.09 0.51%
Apple Inc 111.78 -0.87 -0.77%
General Electric Co 25.62 0.48 1.91%
Intel Corp 36.37 -0.65 -1.76%
Microsoft Corp 47.66 0.14 0.29%
Data as of Dec 19

Sections

New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More

Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More

Forums in dark corners of the web sell the kinds of hacks that befell Sony. More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

The income of the top 1% jumped significantly in 2012, far outpacing inflation. Not only did this group make a larger share of the country's income, their share of total taxes also jumped from 35% to 38%. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.