Wal-Mart cuts annual outlook for 2nd time in 3 months
NEW YORK — Wal-Mart shoppers — much like many Americans — still feel like they're in a recession.
In the uneven economic recovery, their bills are going up, but their wages are not. While the well-heeled crowd benefits from gains in the stock market, Wal-Mart shoppers are struggling with a higher payroll tax. And shopping for bargains isn't a hobby, but a necessity.
For these reasons, the world's largest retailer on Thursday cut its annual outlook for the second time in three months and gave fourth-quarter guidance that's below Wall Street's expectations.
The forecast shows how vulnerable Wal-Mart — and its customers — are to economic ups and downs. Wal-Mart shoppers, who on average make $45,000 a year, were squeezed by the recession that began at the end of 2007 and have struggled to recover since it ended in 2009.
They've been dealing with a 2 percentage point increase in the Social Security payroll tax since Jan. 1. A partial 16-day government shutdown this year hurt business in areas with large military bases. And the Nov. 1 expiration of a temporary boost in government food stamps could hurt customers' ability to spend, though the discounter said it's too early to know.
Wal-Mart earned $3.74 billion, or $1.14 per share, in the three months ended Oct. 31. That compares with $3.64 billion, or $1.08 per share, a year earlier. Net sales rose 1.6 percent to $114.88 billion. On a constant currency basis, net sales would have been $116.2 billion.
Analysts were expecting earnings of $1.13 per share on net sales of $116.9 billion.
Overall, total sales increased 2.4 percent for Wal-Mart's U.S. business, 1.1 percent at Sam's Clubs and 0.2 percent at Wal-Mart's international business.
But Wal-Mart reported a decline in a figure that the industry uses to gauge a company's performance. Revenue at stores open at least a year fell 0.1 percent for all U.S. stores but included a 1.1 percent increase at Sam's Clubs.
Wal-Mart said it expects adjusted earnings per share to be $1.60 to $1.70 for the fourth quarter. For the year, it expects $5.11 to $5.21, compared with its forecast of $5.10 and $5.30 per share in August. That was downgraded from May's forecast.
Analysts expected adjusted earnings of $1.69 per share for the fourth quarter and $5.19 per share for the year, according to research firm FactSet.