WASHINGTON - Wal-Mart, the world's biggest retailer, came up short Thursday of its own profit forecasts, and said the outlook is murky with high fuel prices are cutting into consumer spending.
Wal-Mart said its net profit for the quarter to April 30 rose 13.6 percent year-over-year to 2.5 billion dollars.
Excluding one-time items, Wal-Mart earned 55 cents per share in the latest quarter, a penny below the average estimate of analysts surveyed by Thomson First Call.
Revenues grew 9.6 percent to 70.9 billion dollars, which also fell short of Wall Street expectations.
The company, the world's biggest in terms of overall revenues, said one factor cutting into sales was high gasoline prices, which discourage people from driving to stores and cut into disposable income.
"We achieved record results in the quarter. Yet with higher gasoline prices and a cooler and wetter spring than normal, we missed our plan," said Lee Scott, president and chief executive.
"We are making the necessary adjustments and I anticipate better results in the second half of the year."
Citing expectations that higher gasoline prices will continue to hurt retail spending and deliver below-plan sales, Wal-Mart said it projects second-quarter earnings to come in at 63 cents to 67 cents a share, below analysts' view for earnings of 70 cents a share.
"Expense pressures will remain," said Scott on a pre-recorded call.
Same-store sales for the quarter are anticipated to rise two to four percent.
JP Morgan Chase analyst Shari Schwartzman Eberts said Wal-Mart's outlook was very disappointing, as it was "the largest negative revision in recent memory."
Eberts sees potential for the stock to test new lows as investors begin pricing in near-term concerns over comparable-store sales and margins trends and longer-term worries over slowing revenue growth.
The stock had hit a 2-1/2-year low of 46.20 on April 29. Thursday, shares fell 1.19 to 47.41 dollars in morning trade.
"While full-year guidance is still possible, we believe Wal-Mart is unlikely to achieve its (profit) range without meaningful improvement in the macro environment," said the analyst in a note to clients.
The Wal-Mart report appeared to fly in the face of a government survey released Thursday showing US retail sales jumped 1.4 percent in April, the best gain in seven months.
"Sales in April were not as solid as this (government) report implies," said Wachovia Securities economist Gina Martin.
"Instead, it is more likely that sales are skewed due to timing of the Easter holiday this year. ICSC (International Council of Shopping Centers) Chain Store sales, which posted a 2.2 percent year-over-year increase and fell 1.9 percent for the month, are likely closer to the true trend in sales. In the face of lower tax refunds toward the end of the tax season and higher gasoline prices, consumers slowed down purchases of discretionary items."
05/12/2005 15:31 GMT