Wal-Mart sales miss expectations as shoppers pocket savings

Wal-Mart Stores Inc on Tuesday became the latest US retailer to report weaker-than-expected quarterly sales, saying consumers were pocketing tax refunds and savings from cheaper gasoline rather than buying unnecessary items.
Shares of the world's largest retailer, whose earnings just missed analysts' estimates and whose forecast range for the current quarter was largely below expectations, were down 4.2 percent at $76.56 in morning trading.
Wal-Mart said sales at stores open more than a year increased by 1.1 percent in the 13 weeks ended on May 1 from a year earlier. Analysts polled by research firm Consensus Metrix had expected an increase of 1.5 percent.
The tepid growth underscores sluggish spending across the sector. US retail sales have been flat or lower industrywide in four of the last five months, and department store chains Kohls Corp and Macys Inc also disappointed investors by reporting weaker-than-expected results last week.
"Many of our US customers are using their tax refunds and the extra money from lower gas prices to pay down debt or put it into savings," Wal-Mart Chief Executive Officer Doug McMillon said on a prerecorded earnings call.
Wal-Mart said it drew more customer visits in the United States for the second straight quarter, reflecting efforts to improve service. It also pointed to 7.9 percent growth in comparable sales at smaller-format stores as sign of strength in its business.
But sales of consumer electronics declined, in part because port disruptions on the West Coast delayed TV shipments, Chief Financial Officer Charles Holley told reporters on a call.
Wal-Mart said net profit fell to $3.34 billion, or $1.03 per share, in the first quarter ended April 30 from $3.59 billion, or $1.11 per share, a year earlier. Analysts on average had expected $1.04 per share, according to Thomson Reuters I/B/E/S.
Revenue fell slightly to $114.83 billion from $114.96 billion, reflecting a hit of about $3.3 billion from the stronger dollar.
For the second quarter, Wal-Mart forecast earnings of $1.06 to $1.18 per share, with results hurt by 4 cents because of the firmer dollar and 4 cents from its move earlier this year to increase US workers' pay.