Wal-Mart Stores Inc., the world’s largest retailer, said Tuesday that second-quarter profit rose less than analysts anticipated and lowered its earnings forecast, causing the stock to fall the most in more than five years.
Full-year profit will be up to $3.13 a share, 10 cents lower than its earlier forecast, after sales of apparel and home goods faltered, the company said.
Sales at older stores rose 1.9 percent in the second quarter and are headed for their smallest annual gain since at least 1980. Chief executive H. Lee Scott has failed to lure customers with price cuts on back-to- school and holiday items as higher gasoline and housing costs have curtailed consumer spending.
Net income increased 49 percent to $3.1 billion, or 76 cents a share. Excluding one-time items, profit was 4 cents less than analysts’ estimates. A year earlier, Wal-Mart earned $2.08 billion, or 50 cents a share, after costs to exit Germany.
Revenue rose 8.9 percent to $93 billion for the quarter ended Aug. 3, the Bentonville, Ark. based company said.
“When the low-end consumer isn’t shopping, it’s tough even for Wal-Mart to make their numbers,” said Eric Beder, an analyst at Brean Murray Carret & Co. in New York.
Wal-Mart fell $2.35, or 5.1 percent, to $43.82 in composite trading on the New York Stock Exchange. The stock has declined 5.1 percent this year, compared with a 5.3 percent gain by Target Corp., the second-largest discount chain.
Charles Grom, an analyst at J.P. Morgan Securities Inc. in New York, downgraded Wal- Mart to “neutral” from “overweight,” citing economic pressures into next year.
Virginia Genereux, a New York-based analyst with Merrill Lynch & Co., also downgraded Wal-Mart to “neutral” from “buy.”
