Wal-Mart's Sales, Profit Decline

By Chelsey Dulaney 

Wal-Mart Stores Inc. on Tuesday reported weaker-than-expected sales and a 7% drop in profit, thought the retailer logged its third straight quarter of same-store sales growth in the U.S.

Shares fell 2.2% in premarket trading.

Wal-Mart had been struggling with flat or falling sales recently as customer traffic has remained tepid. But the company notched gains two quarters of gains at the end of last year, helped by operational improvements, lower gas prices and falling unemployment.

In the latest quarter, U.S. same-store sales edged up 0.2%, including fuel.

To turn around its struggling domestic business, Wal-Mart is reinforcing its low-price image, and executives say the company is improving store operations, like in-stock and service levels, which had been neglected in recent years. It also is investing in its online business and announced earlier this year that it would raise the minimum wage paid to employees--moves that the big-box retailer said could eat into its profits.

Overall, for the quarter ended April 30, Wal-Mart reported earnings of $3.34 billion, or $1.03 a share, down from $3.59 billion, or $1.11 a share, a year earlier. Wal-Mart had expected to post 95 cents to $1.10 a share in earnings.

Total revenue, which includes membership fees and other income, edged down slightly to $114.8 billion from $115 billion a year earlier, missing analysts' projections of $116.2 billion.

For the current quarter, Wal-Mart forecast earnings of $1.06 to $1.18 a share. Analysts polled by Thomson Reuters had forecast $1.17 a share in earnings.

Write to Chelsey Dulaney at [e-mail]

Access Investor Kit for Wal-Mart Stores, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US9311421039

Subscribe to WSJ: http://online.wsj.com?mod=djnwires