NEW YORK (Reuters) — Wal-Mart Stores
Inc <WMT.N> said on Friday that bad weather and reduced food stamp
benefits in the United States had dragged down comparable-store
sales in the fiscal fourth quarter, more than offsetting a positive
bump from the holiday season.
The news came the same day the world's largest retailer shaved its
quarterly outlook to account for special items, including those tied
to its store closures in Brazil and China and its Sam's Club
restructuring in the United States.
It now expects earnings for the fourth quarter ending January 31 to
be at or slightly below the low end of its previous forecast of
$1.60 to $1.70 a share.
"Wal-Mart caters to lower-income consumers which have been hit
disproportionately hard relative to higher-income consumers," said
Morningstar analyst Ken Perkins.
About 20 percent of the company's shoppers are food stamp users,
analysts have estimated.
About one in seven Americans took a hit in 2013 when the federal
food stamps program was cut by more than $5 billion. Additional cuts
are expected this year.
Wal-Mart is also facing serious "competitive threats" from dollar
stores and other small-format stores, Perkins added.
The retailer now expects to report lower sales at stores open at
least a year for Walmart U.S. and Sam's Club for the quarter. It had
previously expected Walmart U.S. same-store sales to be relatively
flat and Sam`s Club same-store sales, without fuel, to be flat to up
For the fiscal year, the company said it expected to report earnings
at or slightly below the low end of its prior outlook of $5.11 to
$5.21 a share.
TOUGH HOLIDAY SEASON
Wal-Mart joins a long list of U.S. retailers that in recent weeks
cut their outlooks, laid off workers and closed stores. Faced with
shoppers worried about their job prospects and modest economic
growth, retailers offered more discounts during the holiday season
than a year earlier.
Amazon.com Inc <AMZN.O>, the world's largest online retailer, said
on Thursday that it had missed Wall Street estimates for the holiday
season and warned investors about a possible operating loss.
Perkins said he planned to take a closer look at the charges tied to
Wal-Mart's international operations but still cared more about the
retailer's U.S. business.
"When you look at the long-term drivers of Wal-Mart's business and
their competitive advantage, the U.S. business is still the
strongest business," he said. "If they can get that back on track,
then I think that gives them more options to right the wrongs or
improve the international business as well."
Walmart International's profitability has suffered from an
aggressive expansion and lags that of the overall company. The unit
is also the focus of a costly bribery probe.
The company said it had closed about 50 stores in Brazil and China.
In Brazil, Wal-Mart has struggled to gain market share in the face
of fierce competition from smaller local players and French rivals
Carrefour <CARR.PA> and Casino <CASP.PA>, which controls market
leader Grupo Pão de Açúcar SA <PCAR4.SA>.
After a decade-long boom, the Brazilian retail market is showing
signs of weakness as the economy enters what is widely expected to
be its fourth straight year of sluggish growth.
Wal-Mart added charges of 6 cents a share to account for tax-related
liabilities in Brazil and 5 cents for employment claims there. It
also expects to record a charge for certain store leases in China.
The retailer said a charge for certain terminated franchise and
supply agreements in India would be higher than it had previously
Wal-Mart said it would report its fourth-quarter and fiscal-year
results on February 20, as scheduled.
The company's shares were down 1.2 percent at $73.86 in morning
(Reporting by Dhanya Skariachan;
additional reporting by Todd Benson; writing by Jilian Mincer;
Editing by Lisa Von Ahn)