Wal-Mart Q3 profit up but U.S. same-store sales down; cuts full-year outlook

Bentonville, Ark. – Wal-Mart Stores on Thursday posted a 2.8% increase in its third-quarter profit. But the chain cut its annual outlook for the second time in three months as its core shoppers continue to feel economic pressures.



"The retail environment, both in stores and online, remains competitive," In a pre-recorded conference call, Mike Duke, president and CEO of Wal-Mart Stores, said the retail environment, both online and in stores, remains competitive.



"At the same time,” he said, “some customers feel uncertainty about the economy, government, jobs stability and their need to take care of their families through the holidays. "



Wal-Mart earned $3.74 billion for the three-month period ended Oct. 31, compared with $3.64 billion in the year-ago period.



Net sales rose 1.6% to $114.88 billion, less than analysts expected. Overall, total sales increased 2.4% for U.S. stores, 1.1% at Sam's Clubs and 2% at Wal-Mart's international stores.



U.S. same-store sales dropped 3%, marking their third straight quarterly decline.



According to the Wall Street Journal, Wal-Mart expects upcoming food stamp cuts and a 2% payroll tax increase to negatively affect future same-store sales.



Wal-Mart cut its earnings per share guidance for the fourth quarter and full fiscal year 2013, due to factors including the planned closure of approximately 50 under-performing stores in Brazil and China, plans to independently own and operate the wholesale format in India, currency exchange rate fluctuations, a competitive holiday season, and a full-year effective tax rate that is expected to range between 31 and 33%.



In a statement with the earnings release, Duke still sounded optimistic in describing the company’s third quarter earnings growth and upcoming holiday season.



"Wal-Mart delivered solid earnings growth that was within our guidance range,” said Duke. “Our most important priority is growing top line sales, including same-store sales. Wal-Mart has aggressive plans to help our customers enjoy the holiday season, and there is no doubt that we plan to win for our customers and shareholders throughout the holidays."