Business

Wal-Mart’s adjusted 4Q profits beat Wall Street estimates

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NEW YORK (AP) — Wal-Mart Stores reported an 8 percent decline in fourth-quarter earnings as the world’s largest retailer prunes its global footprint.

The adjusted results, announced Thursday, beat analysts’ expectations, but shares fell 4 percent in premarket trading as Wal-Mart posted a revenue shortfall for the quarter and lowered its annual sale forecast for the year.

The retailer now says that total revenue will be unchanged compared with an earlier forecast for a three to four percent increase.

Wal-Mart’s results come as it faces pressure on all fronts. Its low-income shoppers remain cautious in a still recovering economy. Even lower gas prices haven’t made shoppers splurge — they’re either using the windfall to save more or to pay down debt.

Wal-Mart Stores Inc. is also facing increasing competition from the likes of online leader Amazon.com, dollar stores and traditional grocers like Kroger, which are pushing lower prices.

To stay competitive, Wal-Mart is spending $2.7 billion to raise wages of its hourly workers over a two-year period and has stepped up its investment online and in the stores. But those moves have squeezed profits.

The company is also pruning its global foot print. Last month, Wal-Mart announced it was closing 269 stores, including 154 in the U .S. that includes all of its locations under its smallest-format concept store called Wal-Mart Express. The other big chunk is in its challenging Brazilian market. The closings are part of the company’s overall review of its operations to make it more nimble to better compete with rivals.

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At its U.S. stores, the company has been working to better stock its shelves and it has said that customer experience is better. That helped improve sales and traffic. Wal-Mart said that revenue at stores opened at least a year rose 0.6 percent, its sixth straight increase. And customer counts are up for the fifth straight quarterly period.

“We are seeing momentum in our Wal-Mart U.S. business,” said Doug McMillon, president and CEO of Wal-Mart in a statement. But he added, “We’ve still got a lot of work to do.”

Wal-Mart, based in Bentonville, Arkansas, earned $4.57 billion, or $1.43 per share in the three-month period ended Jan. 31. That compares with $4.97 billion, or $1.53 per share, in the year ago period.

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On an adjusted basis, the figure was $1.49, higher than the $1.46 per share estimated by FactSet.

Net revenue was $128.6 billion. That’s slightly lower than the expected $130.5 billion, according to FactSet.

Shares fell $2.63, or 4 percent, to $63.48 in premarket trading about an hour before the market open. Shares have been up around 8 percent so far this year, after falling nearly 30 percent last year.