Wal-Mart Stores Inc on Thursday reported lower-than-expected quarterly sales at established U.S. stores, hurt by declining food prices and unseasonably warm weather, and its shares fell nearly 3 percent.
Investors shrugged off earnings that slightly exceeded analysts' estimates. Wal-Mart, the world's largest retailer, 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.
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"Food deflation continues to be challenging," Chief Financial Officer Brett Biggs told Reuters.
Deflation has been strong for products like eggs, an important category for a food retailer, he said.
Wal-Mart said 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 is weaker than market expectations of a 1.3 percent rise, according to research firm Consensus Metrix.
Net income attributable to Wal-Mart fell 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.
At Wednesday's close, Wal-Mart's shares were up more than 16 percent since the start of the year.
(Reporting by Nandita Bose in Chicago; Editing by Lisa Von Ahn)