Falling food prices, warm weather hurt Wal-Mart sales

By By Nandita Bose Markets Reuters

Wal-Mart Stores Inc on Thursday reported lower-than-expected quarterly sales at established U.S. stores, hurt by declining food prices and warm weather that reduced demand for winter clothes and other seasonal items.

Continue Reading Below

Shares of Wal-Mart, the world's largest retailer, fell 4.3 percent as investors shrugged off strong online sales growth and a smaller-than-expected decline in earnings.

The company also raised the low end of its fiscal-year profit forecast, in line with Target Corp and other rivals that expressed optimism ahead of the holiday shopping season.

Wal-Mart said it did not expect last week's U.S. presidential election to have a significant effect on holiday spending plans.

"It's way too early to speculate on anything that might happen with the president-elect," Chief Financial Officer Brett Biggs told Reuters.

Biggs said declining prices for eggs and other important products for a food retailer remained challenging, and unseasonably warm weather hurt sales in the back half of the quarter.

Continue Reading Below

Wal-Mart's sales at U.S. stores open at least a year rose 1.2 percent, excluding fuel price fluctuations, in the third quarter ended on Oct. 31. That was weaker than market expectations of a 1.3 percent rise, according to research firm Consensus Metrix.

Comparable food sales fell 1.5 percent in the third quarter, versus a 1 percent decrease in the second quarter.

U.S. store visits rose 0.7 percent, slowing from increases of 1.7 percent a year earlier and 1.2 percent in the second quarter.

Net income attributable to Wal-Mart fell more than 8 percent to $3.03 billion, or 98 cents per share, from $3.3 billion, or $1.03 per share, a year earlier. Analysts on average expected 96 cents per share, according to Thomson Reuters I/B/E/S.

Net sales rose 0.5 percent to $117.2 billion.

Online sales increased 20.6 percent, accelerating from the previous quarter. That business added 50 basis points to third-quarter comparable sales, its biggest contribution to date.

To try to narrow the gap with online leader Amazon.com Inc and increase its dominance in retailing, Wal-Mart has invested heavily in e-commerce, acquiring startup Jet.com in August for $3 billion.

"The U.S. (e-commerce) results were stronger than those in our key international markets, driven by our marketplace offering ... as well as a contribution from Jet.com," Chief Executive Officer Doug McMillon said.

International sales fell 4.8 percent, hurt by a strong dollar and continued weakness in the UK market, but they were up 2.4 percent on a currency-neutral basis.

At Wednesday's close, Wal-Mart's shares had risen more than 16 percent since the start of the year.

(Reporting by Nandita Bose in Chicago; Editing by Lisa Von Ahn)