Wal-mart forecast trails estimates as economy hurts U.S. sales

Wal-Mart Stores Inc., the world's largest retailer, forecast profit this year that trailed analysts' estimates as the sluggish U.S. economy and government benefit cuts threaten to restrain sales.

Profit per share in the year through January 2015 will be $5.10 to $5.45, the Bentonville, Arkansas-based company said today in a statement. The average of 28 analysts' estimates compiled by Bloomberg was $5.55 a share.

Chief Executive Officer Doug McMillon, who took the post earlier this month, is trying to revive Wal-Mart's U.S. same- store sales growth after lower food-stamp payments, higher taxes and struggles to keep shelves fully stocked contributed to four straight quarterly declines. Chief Financial Officer Charles Holley said today that the economic trends, as well as higher health care costs, will continue to hurt the domestic business.

"The U.S. business takes a turn for the worse as middle- and higher-income consumers trade up and away while lower-income consumers continue to bump along the bottom," Faye Landes, an analyst at Cowen & Co., said in a note before the results were released. Landes said the company's "efforts to grow outside the U.S. are compressing overall returns."

She rates the shares market perform, the equivalent of a hold.

Wal-Mart fell 0.9 percent to $74.20 at 7:07 a.m. in early trading in New York. The shares dropped 4.9 percent this year through yesterday, compared with a 1.1 percent decline for the Standard & Poor's 500 Index.

Fourth-quarter net income fell 21 percent to $4.43 billion, or $1.36 a share, from $5.61 billion, or $1.67, a year earlier, the company said today. Excluding some items, profit was $1.60 a share. The average of 22 analysts' estimates compiled by Bloomberg was $1.59.

Revenue increased 1.5 percent to $129.7 billion in the quarter ended Jan. 31. Analysts projected $130.2 billion. Sales at Wal-Mart U.S. stores open at least 12 months excluding fuel fell 0.4 percent.