Wal-Mart Lifts Profit Outlook as Sales Grow

Wal-Mart Stores Inc. reported stronger-than-expected same-store sales growth in the latest period, with slightly more shoppers heading to its stores at a time when many retailers are struggling to attract foot traffic.

The retailer also lifted its profit outlook for the year. Shares rose 3.5% to $75.48 in premarket trading.

Same-store sales at Wal-Mart's U.S. stores rose 1.6%, above its guidance for a 1% increase. Meanwhile, traffic rose 1.2%. Both are signs that the retailer's store improvements and labor investments are paying off.

Many retailers have struggled recently to grow sales. Target Corp. said Wednesday that its same-store sales fell for the first time in more than two years as fewer shoppers visited its locations, while Macy's Inc. last week said it would shut 100 more stores, or 14% of its physical base, as shoppers increasingly opt to make purchases online and spend more on services than on goods.

Demand for clothing and household items in recent years has been markedly softer than during past economic recoveries. What demand there is has been shifting online away from traditional retailers such as Macy's, Kohl's Corp. and Nordstrom Inc., which all reported lower quarterly sales this week.

The Bentonville, Ark.-based Wal-Mart has been spending heavily to get customers back into its stores. It has worked to better stock its stores, improve efficiency and boost the pay for its employees. Operating, selling, general and administrative expenses climbed 4.6% in the latest period.

The company has also invested in its lackluster online operations as Amazon.com Inc. continues to grow sales quickly. Earlier this month, the company announced plans to purchase discount e-commerce retailer Jet.com Inc. for $3.3 billion, the largest purchase to date of an e-commerce startup. Wal-Mart also tapped Jet's founder Marc Lore to lead its e-commerce efforts once the deal is complete.

In the second quarter Wal-Mart reported global e-commerce sale rose 11.8%.

Over all, Wal-Mart reported earnings of $3.77 billion, or $1.21 a share, compared with a year-earlier profit of $3.48 billion, or $1.08 a share. Excluding the gain from the sale of its Yihaodian website in China, the company earned $1.07 a share. The company had said earnings would land between 95 cents and $1.08 a share.

Revenue edged up 0.5% to $120.85 billion. In constant currency, revenue rose 2.8%. Analysts estimated $120.16 billion in revenue.

The company now sees full-year earnings in a range of $4.15 to $4.35 a share. Analysts were expecting $4.27. The company previously guided for earnings between $4.00 and $4.30.

Write to Joshua Jamerson at [e-mail] and Sarah Nassauer at [e-mail]

(END) Dow Jones Newswires

August 18, 2016 07:55 ET (11:55 GMT)

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