Wal-Mart's Stock Drops After Profit Miss, Outlook Cut

By Tomi KilgoreMarketWatch Pulse

Wal-Mart Stores Inc.'s stock dropped 2.6% in premarket trade Tuesday, after the discount retail giant missed fiscal second-quarter profit expectations, and cut its full-year outlook. For the quarter ended July 31, earnings declined to $3.48 billion, or $1.08 a share, from $4.09 billion, or $1.26 a share, in the same period a year ago. That was below the FactSet EPS consensus of $1.12. Revenue rose 0.1% to $120.23 billion, above the FactSet consensus of $119.8 billion, as a sharp increase in membership and other income offset a slight decline in net sales. Same-store sales rose 1.5% at Walmart US stores, above the FactSet consensus of 1% growth. Sam's Club same-store sales increased 1.3%, beating the FactSet consensus of up 0.8%. The company cut its full-year EPS outlook to a range of $4.40 to $4.70 from $4.70 to $5.05, which includes a fiscal third-quarter outlook of 93 cents to $1.05. The FactSet Q3 EPS consensus is $1.08. "Operating profit will be pressured for the remainder of the year, due to continued investments in store associate wages and additional hours, as well as headwinds from pharmacy reimbursements and ongoing shrink, primarily in Walmart US," said Chief Financial Officer Charles Holley. The stock has tumbled 16% year to date through Monday, while the Dow Jones Industrial Average has slipped 1.6%.

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