Bentonville, Ark. – Wal-Mart chief executive Lee Scott warned Tuesday that earnings in the current quarter could fall short of Wall Street expectations and said the company will focus on prices this summer in a bid to rekindle sales in U.S. stores.
The tepid outlook from Wal- Mart – considered a barometer for the retail industry – could serve as a warning bell that rising gasoline prices and a weakening housing market will continue to erode consumer spending in the coming months.
The world’s largest retailer said it expects second-quarter profits of 75 cents to 79 cents per share. Analysts surveyed by Thomson Financial are looking for a profit of 79 cents per share for the period, which ends July 31.
“Quite honestly, we’re not satisfied with our overall performance,” Scott said during a pre- recorded conference call.
Sales and profits for the quarter, he said, were “not where we would have expected to be nor where we believe we should be.”
“You will see us be more committed than ever to price leadership,” Scott said.
Wal-Mart is losing market share after a shaky attempt last year to offer trendier, pricier fashions like skinny jeans, which failed to garner broad customer appeal. Wal-Mart began to shift its focus back to lower-priced merchandise last holiday season.
Robert F. Buchanan, retail analyst with A.G. Edwards & Sons, said apparel continues to be a problem for Wal-Mart.
Department stores such as J.C. Penney Co. and discounters like Target Corp. have improved their fashion mix, striking up exclusive deals with designers.
