Wal-Mart’s second-quarter profit up 5.7%
Discount giant Wal-Mart Stores Inc. reported a rise in second-quarter profit but saw its shares fall because of Wall Street concerns about weakness in its international markets.
For the three months ended July 31, the world’s largest retailer reported net income of $4 billion, or $1.18 a share, up 5.7% from $3.8 billion, or $1.09 a share, a year earlier.
Wal-Mart executives said Thursday that customers are still feeling the pressure of a depressed economy and tending to spend based on when they get paid.
“For today’s customers, the paycheck cycle remains pronounced in the United States and international markets,” Wal-Mart Chief Executive Michael Duke said in a conference call with analysts. “Given the continuing economic pressures, we believe that our price leadership and value are growing in importance to customers across income levels.”
The company’s low-price strategy boosted net sales in its international divisions 6.4%. Sales at U.S. Wal-Mart stores open at least a year, an important measure of a retailer’s health because they exclude the effect of store openings and closings, climbed 2.2%.
Wal-Mart raised its full-year guidance to $4.83 to $4.93 a share, up from a previous forecast of $4.72 to $4.92 a share. The company also predicted a third-quarter profit of $1.04 to $1.09 a share.
Despite the boost in sales, shares of the Bentonville, Ark., company fell $2.30, or 3.1%, to $72.15 in trading Thursday.
Analysts cite slowing momentum domestically and in international markets as a source of concern amid a still-stagnant economy. This year, Wal-Mart announced plans to slow down expansion in China and Brazil. The company also was hit with multiple investigations after allegations surfaced in April of rampant bribery and corruption in its Mexican subsidiary.
Looking ahead to the holidays, executives said the company would bring back its layaway program so shoppers can pay for items a bit at a time starting in the third quarter.
“We’re refining our assortment while focusing on back-to-school and the holiday season,” said William Simon, chief executive of Wal-Mart U.S. “We feel our inventory position will help us drive sales in the back half of the year.”
