Wal-Mart's U.S. sales woes deepen
Shopping carts are seen outside a Wal-Mart Supercenter in Coolidge, Arizona December 6, 2010. REUTERS/Joshua Lott
On Tuesday February 22, 2011, 7:59 am
By Jessica Wohl
CHICAGO (Reuters) - Wal-Mart Stores Inc posted its seventh consecutive quarterly drop in sales at existing U.S. stores and said it will take some time to turn around sales in that unit.
The world's largest retailer has struggled with pricing as it has lost customers to dollar stores while it also is still recovering from a poorly executed decision, since reversed, to pare down the number of items it offered.
"Some of the pricing and merchandising issues in Wal-Mart ran deeper than we initially expected, and they require a response that will take time to see results," Wal-Mart CEO Mike Duke said in a statement, using the style Wal-Mart uses for its U.S. discount stores.
The results and comments about future sales were in contrast to company optimism in the fall, when Wal-Mart said fourth-quarter same-store sales at its namesake U.S. stores should rise, even though its official forecast suggested a decline of 1 percent to a rise of 2 percent.
"At the analyst day in October, Mike Duke made it very clear they were going to do a positive comp this quarter in Wal-Mart U.S. and clearly (they) did not do that, so that was a disappointment," said Telsey Advisory Group analyst Joseph Feldman
The company forecast U.S. same-store sales in the current first quarter to be down 2 percent to flat.
While Wal-Mart has expanded into more than a dozen countries and is ripe for further international growth, the U.S. stores still represent the lion's share of its business. More than 62 percent of its $418.95 billion in fiscal 2011 sales came from the U.S. discount stores, and sales in the unit are key to pleasing Wall Street.
Wal-Mart shares fell 1.3 percent to $54.65 in premarket trading, as the disappointing U.S. sales overshadowed earnings that beat analysts expectations.
Wal-Mart earned $5.02 billion, or $1.41 per share, in the fourth quarter ended on January 31, up from $4.82 billion, or $1.26 per share, a year earlier.
Excluding one-time items, earnings were $1.34 a share, compared with the analysts' average estimate of $1.31, according to Thomson Reuters I/B/E/S.
Sales overall rose 2.5 percent to $115.6 billion, short of analysts' expectations of $117.7 billion. Sales at U.S. stores open at least a year fell 1.8 percent.
