Wal-Mart cuts its annual earnings forecast

NEW YORK -- Wal-Mart Stores reported a lower-than-expected quarterly profit Tuesday and cut its full-year earnings forecast, saying "economic pressures" like higher fuel prices have depleted shoppers' wallets.

"It is no secret that many customers are running out of money toward the end of the month," said Lee Scott, chief executive of the world's largest retailer.

The Bentonville, Ark.-based company's shares fell 5.1 percent and helped drag down the overall market.

U.S. retail stocks have fallen in recent days as investors fret that turbulence in the housing market and high gasoline prices have curbed consumer spending.

Those difficulties appear to be rippling across the globe, and Scott said on a recorded call that higher fuel prices, interest rates, utility costs and "more financial pressure" were hurting sales in markets like Mexico and Canada.

Wal-Mart's earnings rose to $3.1 billion, or 76 cents per share, in the second quarter ended July 31, from $2.08 billion, or 50 cents per share, a year earlier, when the company took a charge for selling its German stores.

Earnings per share from continuing operations were 72 cents per share before a gain of 4 cents. Analysts on average were expecting 76 cents, according to Reuters Estimates.

Sales rose nearly 9 percent to $91.99 billion.

U.S. sales at stores open at least a year, a key retail gauge known as same-store sales, rose 1.9 percent. Same-store sales increased 1.2 percent at Wal-Mart stores and 5.9 percent at the Sam's Club warehouse division.

At international stores, sales were up almost 16 percent at $21.6 billion.

In an interview, Chief Financial Officer Tom Schoewe said Wal-Mart expected many of the trends it saw in the second quarter to continue in the current period, but the retailer was still "feeling pretty good" about prospects for the holiday season.

For its third-quarter, Wal-Mart forecast earnings per share of 62 cents to 65 cents from continuing operations, while analysts on average were expecting 68 cents. For the full year, the company said it expected earnings of $3.05 to $3.13 per share from continuing operations, down from an earlier view of $3.15 to $3.23. Analysts were expecting $3.16.

Schoewe said the company had some "very aggressive marketing and sales plans" for the fourth quarter to help spur holiday sales.